FAQ's: Typical Questions Asked ~ Leasing vs. Buying
What is a Lease?
A lease is a contractual agreement for the use of certain equipment. It is
entered into between the owner (Lessor) and the equipment user (Lessee). The Lessee agrees to pay the Lessor a monthly rental
payment for the right to use the equipment for a specified length of time (term). The resale value (residual value) of the
equipment at the end of the lease term is taken into account in the pricing of most leases. A higher residual value at the
end of the lease usually means a lower monthly rental payment.
The end of lease purchase option can also be structured
to meet the Lessee’s needs. Leases usually require one or two advance rental payments at inception. Some leases can
be arranged with zero advance payments. They are usually specified as the first and last month’s rental payments, but
can also be defined as security deposits or prepaid purchase options.
A lease is a contractual agreement for the use of
certain equipment. It is entered into between the owner (Lessor) and the equipment user (Lessee). The Lessee agrees to pay
the Lessor a monthly rental payment for the right to use the equipment for a specified length of time (term). The resale
value (residual value) of the equipment at the end of the lease term is taken into account in the pricing of most leases.
A higher residual value at the end of the lease usually means a lower monthly rental payment.
The end of lease
purchase option can also be structured to meet the Lessee’s needs. Leases usually require one or two advance rental
payments at inception. Some leases can be arranged with zero advance payments. They are usually specified as the first and
last month’s rental payments, but can also be defined as security deposits or prepaid purchase options.
How Does Leasing Work?
1. Select the equipment
2. Complete a credit application
3. Lessor issues a credit approval once the credit is approved
4. Lessor purchases the equipment and leases it
to your company for a monthly rental payment
5. Upon expiration of the lease, you have the option to purchase, release,
replace or return the equipment.
How Does Leasing Benefit My Business?
Here
are some reasons why 80% of all U.S. companies are leasing:
• Leases tend to be more flexible than loans
•
Leasing allows more timely equipment acquisition
• Leasing provides the benefits of ownership without the expense
of ownership
• Lower up-front investment
• Monthly payments can be structured with flexible payment options
• Predictable fixed payment plan - no variable rates
• Preserves line of credit for other business uses
• Higher-quality equipment is affordable
• Qualifying is easier with a lease
• Tax advantages (details)
• Installation, sales tax and freight can be included in the lease
• Minimize working capital usage
Why Lease with MFS?
• Competitive rates
• Simple, one page
application for amounts up to $150,000 (and even higher in some instances)
• 24-48 hour credit decision
•
36-60 month terms
• Customized payment structures
• We provide a lease structure tailored to your industry
• Talk to a real person, not a recorded answering device
