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Should You Lease Equipment? What Leasing Company

by

sprokop

The \’ lease equipment \’ decision can be a complex and / or confusing one when the Canadian business owner or financial manager is ready to choose the right leasing company for the firms asset financing needs . Who should you deal with? What are the differences between lessors? What mistakes can be made… and how can you take advantage of the right benefits of leasing assets? Whew… a lot of questions! Let\’s provide some solid answers to the lease finance conundrum!

There are numerous financiers of equipment assets in Canada. While some might be \’ pure play \’ equipment lessors others might be a hybrid, offering loans, bridge loans, etc. Choosing who to use, as we have pointed out carries rewards… and some risk.

At the end of the day there are 3 real, as we call them \’ pure play \’ lease type firms in Canada. They are independent commercial financing companies, captive finance firms (more about those later), and bank subsidiaries and divisions of our Canadian chartered banks. There is also what we can call a \’ hybrid \’ provider that might just possible be your best solution, an independent Canadian business financing advisor who has strong relations with all of the above. At the end of the day a little help from an expert never hurts.

When you at least know the different categories of lessors out there it certainly helps to level the playing field!

We would venture to say that independent commercial lease companies in Canada provide the bulk of asset financing to the industry. It\’s their only job, and they do it well. They aggressively market asset financing to Canadian business and are in a position to use credit and asset expertise to deliver on solid fixed asset financing solutions to your firm. They industry, as we have noted in the past is diverse even on its own – there are micro, small, mid and large ticket lessors, and all of them have different ranges of pricing and credit criteria . Typically commercial independent lease firms offer two types of leases, lease to own \’ capital \’ leases, and lease to use \’ operating\’, or \’ rental \’ leases. Knowing which type of lease you need helps you narrow who to deal with.

Independent lease firms pay your vendor on your behalf and enter into a lease contract with your company. Title remains with the leasing company until you typically have paid all the monthly rentals. These firms make their profit from the finance charge, and on occasion from the residual value of the equipment if you are obligated to return it.

Captive lease firms are typically associated with a specific manufacturer. They are the \’ in house \’ arms of large computer and auto and construction equipment firms as an example. They are usually great to deal with because, no surprise here, they are incented to finance the product their parent company sells your firm. Credit is sometimes more flexible and in many cases return and upgrade options are plentiful.

Many of Canada\’s chartered banks have re – entered the equipment leasing market. While credit criteria and standards are very high it\’s no surprise that rates and terms are great. Typically banks will only do lease to own type transactions. Don\’t expect your bank to offer a computer upgrade option on your technology financing needs!

Using an experienced Canadian business financing advisor for your needs might often be the perfect solution to size up the entire market at once – with no financial or time investment by yourself. Talk about a win / win! Working with a respected and credible party can add value, reduce pricing, and enhance terms and benefits to your lease equipment needs when you need a leasing company in Canada.

Stan Prokop – founder of 7 Park Avenue Financial http://www.7parkavenuefinancial.comOriginating business financing for Canadian companies , specializing in working capital, cash flow, asset based financing . In business 10 years – has completed in excess of 85 Million $$ of financing for Canadian corporations . Core competancies include receivables financing, asset based lending, working capital, equipment finance, franchise finance and tax credit financing. Info re: Canadian business financing & contact: http://www.7parkavenuefinancial.com/lease-equipment-leasing-company-financing.html

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