lease versus loan

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In its simplest terms, a loan is the borrowing of money, while a lease is a rental/purchase agreement for the use of specific equipment. 80% of businesses acquire their capital equipment through leasing because itís the most cost effective way to buy something that depreciates and loses value.

 

LOAN

LEASE

RATES

Rates are usually floating and based on the prime rate or some other index such as LIBOR. As the index fluctuates so does your monthly payment. This is an advantage during periods of falling interest rates but can be a disadvantage when interest rates rise. Rates and payments are generally fixed for the life of the lease, unless your lease has special provisions. A lease is the best choice if you expect rates to rise.

AMOUNT FINANCED

Banks will generally only lend a portion (75%-90%) of the equipment cost - not including soft costs, such as, shipping, installation, training, etc. This is not a problem if you have extra cash to invest but not good when cash is tight. Your complete purchase is financed 100%, including soft costs and sales tax. Your out of pocket expenses are usually limited to only first and last monthís payment. New Leaf Funding can cover the deposits most vendors require to place your order. This is a good option when cash is tight.

EXTRA COSTS OR FEES

Banks use fees to boost their return on your loan or commission for the representative. You might encounter application fees, origination fees, schedule fees, funding fees, or closing costs. Over and above your down payment you will be charged expenses associated with approving and executing your loan application. With the majority of all small ticket equipment leases there are no origination fees, no down payments, and no closing costs. Our documentation fee is minimal depending on the size and difficulty of your transaction. New Leaf Funding does not charge any application fees.

AVAILABLE TERMS

Banks tend to be less flexible than leasing companies because most seem to offer a ďtake it or leave it? program so you either fit in their box or you donít. This is not good when you need flexibility or options. With a New Leaf Funding lease you choose the terms, you chose the purchase option, and you choose the amount you want to lease. (12-60 month leases are most common) Custom terms can easily be arranged.

EQUIPMENT TYPES

Banks will not finance equipment that they believe has limited collateral value. Some banks will not finance used equipment. New Leaf Funding has the ability to finance almost any and all equipment types: both new and used.

COLLATERAL

Banks usually secure their loans with additional collateral such as, real estate, other equipment, inventory, or receivables. Its common practice for banks to file a blanket lien against all assets of your company. With most leases the only collateral required in the equipment being leased.

EASE OF APPLICATION

Regardless of the amount requested banks will not even begin to consider your request until you supply them with a full financial package. (Both personal and business information is required). Our business is based on making the financing process convenient for our clients. Odds are that New Leaf Funding can approve your lease with just the information provided on our simple one page application.

SPEED

Banks are notorious for slow credit decisions, it can take weeks to prepare your request and bring it to the credit committee for review. New Leaf Funding will send terms to you within 24 hours of receiving your completed credit application.

 

lease versus loan
In its simplest terms, a loan is the borrowing of money...
more.
leasing benefits
If it appreciates, buy it. If it depreciates, lease it...
more.

contact info
465 S. Orlando Avenue
Suite #404
Maitland, Florida 32751

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