- Are lease payments deductible?
A true lease or tax lease allows the lessee to deduct the lease payments as an expense for acquired capital assets used in the operation of a business. Please consult your accountant or tax attorney regarding your specific tax advantages
- How long is the lease application process?
Once Executive Financial Funding receives a completed credit application and all other necessary supporting data, we can approve lease transactions of $15,000 or less, within 48 hours. Leases that are more than $15,000 will be approved within one week.
- Once the lease is approved, what happens next?
Once the lease application has been approved and your vendor has sent an invoice to us, lease documents will be drawn. Upon our receipt of the signed documents and the initial payment, we will notify your vendor to ship and install (if required) the equipment. Upon verification of delivery and your satisfaction of the equipment by way of a signed Delivery and Acceptance form, we will make payment to the vendor.
- Is a down payment required on a lease?
Leasing is generally considered 100% financing therefore no down payments are required. However, most leases require first and last months payment and documentation fee upon lease signing.
- How are lease payments structured?
There is considerable flexibility in payment arrangements. While most leases provide for regular monthly payments, a lease can be written for payment at irregular intervals. Terms range from 24 to 84 months and can be customized to suit your company's cash flow needs.
- Can lease payments be reduced?
Lower monthly or quarterly lease payments can be negotiated, usually by extending the term of the lease and/or opting for a 10% end-of-lease purchase rather than a $101.00 buy-out. Assuming that payments are fixed an extended lease term can reduce the amount of the monthly payment. This might be an asset for a company whose cash flow is tight. It is important to understand that although an extended term may lower the amount of the individual payment, the aggregate amount paid over the term of the lease will be higher.
- Can I purchase the equipment I lease?
At the end of the lease term you have three options:
- The equipment may be purchased outright at the termination of the lease. This is referred to as a P.U.T. - Purchase Upon Termination. The purchase amount is agreed in the lease terms. Usually purchase or buy-out terms are $101.00, 10% of original cost or fair market value. Fair market terms are usually not available on smaller ticket leases.
- The equipment can be rented on a monthly or annual basis as set forth in the lease terms.
- The equipment can be returned to the lessor with no additional monies due.
- What is a "Fair Market Value" (FMV) purchase option?
If your lease contains a FMV purchase option, you can purchase the equipment at the end of the lease for its fair market value. That amount is the price at which the leased equipment can be sold to a willing buyer. This option is very beneficial on equipment that depreciates in value.
- What is a "$101-out" purchase option?
A "$101-out" purchase option gives the lessee the option to purchase the equipment at the end of the lease term for $101.00. This type of lease is usually used when the customer wants to own the equipment at the end of the term without having to make a large final buy-out.
- What is "Purchase Upon Termination" or P.U.T.?
"Purchase Upon Termination" is a lease in which you must purchase the equipment for a fixed percentage of the original invoice amount at the end of the lease term. This amount is agreed in the original lease terms and is most frequently 10% if the original equipment cost (invoice amount).
- What is the lease rate or payment?
The total equipment cost and terms (length) of the lease will determine the lease rate (factor) and corresponding payment. Past credit history and type of equipment are also considered in determining the lowest possible rate and payment.
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