Smart Equipment Leasing Strategies - It's in the Fine Print

The U.S. Department of Commerce continues to citebecause of a few fine points related to financing. The
what business owners and financial managers alreadymanufacturer's leasing source may not offer the best
know: rapidly changing technology andpriced financing package it often is an easy option to
cost-containment issues have spurred phenomenalchoose.
growth in the equipment leasing market. Despite2. Reduce up-front costs and monthly payments.
current economic difficulties, Global Insight, Inc., predictsFocus on the best price for the equipment, not the
that over $1.15 trillion in equipment will be acquiredmonthly payment. Always negotiate with the
during 2009. More than $672 billion will be financedequipment sales person as if you are a cash buyer. In
using loans, leases and other financial instruments.that way you are assured that you remain focused on
Eighty percent of U.S. companies lease equipment tothe asset price. The financing negotiation will follow
add or upgrade and stay in step with the changinglater. The best monthly payments and terms are
landscape of business, especially in the area ofdriven by the purchase price you negotiate.
technology. Fifty-nine percent of all businesses that3. Adjust the payment schedule. After the cost of
finance equipment report they will lease computerequipment is negotiated, payment terms are also key
equipment and 37 percent say they will leaseto cost savings. Request the payment plan that fits
software. Digital printing equipment is the mostyour cash flow projections, whether it is monthly,
common equipment leased in every printing company.quarterly or annual. If equipment operators experience
However, not all equipment leases are the same. Howa learning curve, structured lease payments may be
can you protect your company? Whether yourhelpful. Consider lower payments during the first three
company is small, midsize or large, avoid technicalto six months.
obsolescence without overspending by learning to4. Understand buy-outs. You may believe you can buy
bring financial and technical matters into line with theequipment at the end of the lease for "about 10
business issues. By trimming hidden fees, it is possiblepercent" while the lease states "in-place and in-use fair
to cut five to 15 percent from the cost of leasingmarket value." The difference can be significant and
equipment, whether it is a laptop or desktop computer,costly.
molding equipment, printing press, fork lift or digital5. Avoid hidden penalties. Penalties as high as 60
copier.percent that lurk in return provisions, upgrades,
The first step to paring costs is awareness. You holddeadlines, cancellations and automatic extensions are
the power of negotiating financial terms in any leasenegotiable and avoidable.
agreement; in turn, you hold the power to save6. Beware of the "Perpetual Lease." Chances are, you
hundreds, thousands--even millions--over the life of thewill not be notified that the original lease term has
lease.ended. The lease may automatically extend or renew,
Here are eight smart leasing strategies to save timetrapping you in added payments or a costly
and money."Evergreen Lease."
1. Find a natural fit. There are many types of leases7. Ask an expert. Consult a lease review expert to
and leasing companies. All offer variables that affectbring financial and technical matters into line with legal
the bottom line, and all contain benefits as well asissues--before you sign.
potential pitfalls. Shop for the company that helps you8. Never too late to negotiate. Even if you are in a
get what you need when you need it--at the rightlease, there are still negotiable items such as late
price. In theory, the leasing company wants yourpayments, end of lease purchase prices, relocation
business and will not jeopardize the relationshipfees and return fees.