Finding Lease Financing

All kinds of organizations, from banks and traditional financial companies to equipment manufacturers and dealers, offer lease financing. Of course, each source has its advantages and disadvantages, so it’s in your best interest to understand your own financial needs and then match your needs with lease financial sources that most closely meet your needs.

Looking at the big picture, three major sources of lease financing exist: captive leasing companies, independent leasing companies, and banking institutions. In this article, we take a look at each source.

Captive teasing companies

Say you’re in the market to buy a General Electric jet engine to keep as a spare at your Chicago aircraft maintenance facility. Where do you turn to lease the engine? Well, General Electric has an entire group ‘” General Electric Engine Leasing (GEEL) ‘” devoted to nothing more than making it as easy as possible for the company’s customers to lease its products.

Many manufacturers ‘” especially manufacturers of big-ticket items ‘” include captive leasing operations (called “captive” because they most often exclusively finance products produced by their corporate parents) within their organizations as a way to increase product sales and make a little extra money while they’re at it. Ford Motor Credit, Cat Financial (Caterpillar), and IBM Global Financing are just a few examples.

Captive leasing companies often offer special deals, particularly on closeout equipment or last year’s models. If you have a specific brand of equipment in mind, check out what kinds of deals the manufacturer’s captive leasing company offers before you agree to go with another source of financing.

Banking institutions

Just as banks, savings and loans, credit unions, and other banking institutions offer loans, most now offer leases on capital equipment as well. Although many have provided the financing behind the leases offered by independent leasing companies and retail businesses such as auto and heavy equipment dealers for years, more and more banking institutions are beginning to offer leases directly to the public.

If you’re interested in leasing equipment for your business, see whether your bank offers lease financing and, if so, get a quote. When you have a longstanding relationship with a bank, you may have access to programs that are unavailable to the general public, and you may be eligible for special rates or other incentives.

Independent teasing companies

In addition to the captive leasing companies and banking institutions that offer lease financing, there are many independent leasing companies ‘” from one-person home-based businesses to large financial corporations with thousands of employees ‘” that would be happy to process your lease for you. Because they have access to a wide variety of funding sources, independent leasing companies often offer better deals than the competition. They can also be more flexible when negotiating the terms of the lease.

Even if leasing is a beneficial option for you, there are good lease deals out there and there are bad ones. Your number one goal when shopping for a lease is not to get caught in a bad lease. Once you sign the lease contract, you’ve committed your company to several years of payments on the equipment that you’ve chosen to finance. You’ll be required to make the payments regardless of whether you actually use the equipment, whether you lose or damage the equipment, and whether it suits the purposes for which you acquired it.

Getting out of a bad lease can be much more difficult than getting into one, so take your time and review the lease terms closely. If you don’t understand the agreement, by all means have an attorney or financial consultant review it for you.