| Some business owners look over equipment leasing | | | | interest on your cash. You can try to negotiate this if |
| contracts carefully. They make notes and question | | | | you pay attention. |
| obscure language. They then send the document to | | | | Equipment leases can be short or long term. They |
| their lawyer for review and request that changes be | | | | cover goods ranging from heavy construction |
| made. The attorney then contacts the leasing | | | | equipment to telephone systems and copying |
| company to negotiate the most favorable terms. | | | | machines. Some questions, however, relate to leases |
| How often does this chain of events occur? Very | | | | of many different kinds of equipment. |
| rarely. | | | | Lessees need to know, for example, whether they |
| Managers tend to skim through the contract. Most | | | | can move equipment to a new location without |
| agreements are on forms, so little thinking happens | | | | written consent for which they may have to pay. |
| and big problems occur. Nowhere is this more true | | | | Computers and other technology products need |
| than in equipment leasing. | | | | upgrades often. You need strong lease language if |
| Remember, the only time you can negotiate is up | | | | you want the lessor to pay for upgrades, adding |
| front. Once you've signed off, you're obligated.. Here | | | | costs to lease payments. |
| are a few things to know and understand about | | | | Much the same holds true for alterations and |
| equipment leasing. | | | | modifications, which leasing companies usually accept |
| Choose and experienced lease broker: | | | | when they're easy to remove. Additions and |
| Make sure your broker has an adequate number of | | | | alterations, however, may be taxable income to the |
| leasing companies he deals with. A broker worth his | | | | lessor. |
| salt will pick the right one for your situation and | | | | Lease Termination |
| needs. | | | | Early termination probably is the most common |
| Don't pick a lessor first: | | | | equipment leasing problem because you can't sell |
| Make them compete for your business. Once a | | | | goods under a lease. You're a lessee, not an owner. |
| vendor has your account, there's not much motive to | | | | Often, the termination price is the total of all |
| negotiate. | | | | payments remaining. Other approaches involve |
| Know What you Want: | | | | preserving the lessor's originally-anticipated yield. If |
| Expand your knowledge. Know your lessor. Will | | | | you haven't done so already, this is a good time to |
| upgrades and additional needs be provided? Will the | | | | call your accountant to help you make the best |
| lessor help with regulatory changes? What about | | | | possible deal and to understand it. |
| flexibility at the end of the lease? | | | | Provisions for early termination, early buyout, |
| Know your equipment: | | | | subleasing and assignment protect lessees. They are |
| Will it become obsolete during the lease term? Will | | | | not, however, going to be in that printed-form |
| you need more of it? Less? Most equipment leases | | | | contract, and they're not going to be in the deal at all |
| start with acceptance or commencement. On that | | | | unless you put them there. |
| date, you inspect the product and pronounce it fit | | | | Other provisions protect you when the lease ends. |
| for service. Then it's yours, even though the | | | | De-installation date is a key provision. Do you |
| equipment is in a lessor's warehouse or in a boxcar. | | | | dismantle equipment, crate it and ship in on your dime |
| Your lease shouldn't begin until you're using the | | | | or the lessor's? |
| equipment successfully. | | | | Don't take anything for granted. Most form leases |
| Make sure the equipment works: | | | | require shipment to anywhere in the United States. |
| All equipment leases include a non-negotiable | | | | Maybe you can cap that, or limit it to a specific |
| "hell-or-high-water" clause that makes you pay | | | | distance such as 100 miles. If you want to keep |
| regardless of whether equipment works. Unless you | | | | items, can you do so and still send back part of the |
| love paying for equipment that just sits there, be | | | | equipment? |
| certain it operates when you accept it. If things are | | | | Most leases state a "fair market value" at which you'll |
| complicated put an engineer or other expert on it. | | | | return goods to the lessor. You need to understand |
| Remember, once you accept, you pay every month. | | | | how that's calculated and what charges it includes. |
| Alternations and other details: | | | | Again, this may be a good time to talk with your |
| Most lessors buy equipment from manufacturers or | | | | accountant. |
| wholesalers before they deliver it to you. Then they | | | | Equipment leasing continues to be a significant source |
| take your money and, perhaps a month or two later, | | | | of financing for businesses of all sizes. To maximize |
| pay on account to the manufacturer or wholesaler. | | | | its many advantages, however, you must study |
| For 30 or 60 days, your lessor is free to earn | | | | every detail in the contract. |