Equipment Lease Agreements
You should always read and completely understand the
terms and conditions of your equipment lease agreement. All equipment lease
contracts are not the same.
leasing companies try to make their equipment leases so long and complex that no one can
understand them. Our Master Equipment Leases and small ticket lease agreements
are written in plain English with terms that everyone can understand. You will
be pleasantly surprised how easy it is to do business with Capital Resources as
compared to other finance companies.
Some terms and conditions you may want to negotiate when leasing equipment:
or commitment fees: Some lessors charge you a fee to process a credit application or a
commitment fee to hold the credit open for a period of time once the credit has been
approved. Capital Resources does not charge you a fee to process a
credit application or a commitment fee to hold the credit open for 90 days.
Fees: Some leasing companies are not full service lessors but simply are
leasing brokers that charge you a
separate broker fee for completing the transaction.
Capital Resources' rates are very competitive and we do not charge any broker
fees to our customers to complete a transaction.
Of Term Option Stated As "Mutually Acceptable": Some lessors will
provide you an option to buy the equipment at a mutually acceptable price vs. a fair market
value price. Lessor that agree to sell the equipment for a mutually acceptable price can
charge you just about anything they want to charge. Whereas fair market value is a legally
defined term that can be quantified. Capital
Resources' purchase options are fair market value or one dollar.
Infamous ABC Lease: Some lessors try to lock you up forever and you can only
escape by paying an inordinate fee. Watch out for end of term clauses that state you can
exercise only one of three options: a) you can buy the equipment at a mutually acceptable
price, b) extend the lease at a mutually acceptable price or c) return the equipment to
the lessor only if you do a new deal with the lessor at a mutually acceptable price. This
represents a costly loop you don't want to get into.
Capital Resources gives you an option to buy the equipment at the end of the lease for a dollar or
fair market value, or to return the equipment with no
To Pass Title To The Equipment: Some lessors charge you a fee to obtain clean
title to the equipment in the event you exercise your option to purchase the equipment for
a dollar or fair market value at the end of the lease. We have seen these fees as high as
$250 or more. Capital Resources does not charge any fees to pass
title of the equipment to you in the event that you exercise your option to purchase the
vs Option: If it is represented to you that you have an option in your lease to buy
the equipment for fair market value at the end of the lease, make sure you have an "option"
and not a "put". A "put " may result in a
lower monthly rate but requires you to purchase the equipment at the end of the
lease. An option gives you a choice to either purchase or not to purchase the equipment at
the end of the lease. You have an "option" to buy the
equipment from Capital Resources at the end of the lease term unless you specifically
requested a "put" structure.
Vendor Payment: Some lessors increase their yield by delaying the payment
to the vendor for 30, 60, 90 or more days after the lessee has accepted the
equipment as satisfactory for the purposes of the lease. This tactic increases the lessor's yield, but many times creates an unnecessary hardship for the vendor.
Capital Resources pays the vendor for the equipment the same day the
equipment is accepted by the lessee thereby reducing the vendor's accounts receivable and
increasing their cash flow.