Tips to Landing Your First Equipment Leasing Agreement
Equipment leasing can be a great way of securing the machinery you need to operate your business, and to help your business grow in a way that would not be possible without it. But before you plunge right in and make a deal with the first vendor on your short list, there are some points you should be aware of, so that you don’t and up making a serious mistake.
Here are some things you should keep in mind when you’re considering equipment leasing:
• Upfront fees – avoid paying any upfront application fees to the provider offering the machinery, because you can usually get by without them
• Do some research – make sure to carry out due diligence on your financing provider, including whatever background checks are available to you, as well as any testimonials from other customers
• Most favorable terms – don’t automatically assume that the equipment company will be able to provide you with the most favorable financial terms – in fact, it is fairly likely that you’ll find a more favorable deal with a dedicated lease provider
• Know your status – before you contact any equipment company or financing company, make sure you have a good handle on your business credit situation, and the overall state of your finances
• Bad business lines – make sure you can justify any negative business lines that show up on your credit history to a leasing company, for example any business losses which you may have had in the past few years
• Bundling – think about whether it’s advantageous for you to bundle equipment acquisitions from multiple vendors all within the same agreement you make with a financing company. You’ll often find that rates are more favorable on higher transaction amounts, and processing fees are likewise reduced.
• Equipment benefits – be prepared to formally explain to a financing company why acquiring this equipment will be beneficial to your business, and have the numbers available to support your claim
• Payment terms – request payment terms from your equipment vendor, so that a portion of the cost can be deferred, and so that you can also progress your payments and coordinate financial deposits.