LEASING RATES

PLEASE READ ALL OF THIS AS IT IS VERY IMPORTANT TO YOUR LEASE

How do lease rates compare?  This applies to ALL leasing companies, some will try to hide.

As you might imagine, we have varying rates for different types of transactions.  Considerations include:

• The credit strength of the applicant and any guarantors

• The size of the transaction, as measured by our dollars invested

• The length of term of the lease

• The anticipated lease-end residual value

Our very best leasing rates are for well established companies with PERFECT credit and strong guarantors, leasing a LOT of equipment on a long-term lease with a high anticipated residual value.

Conversely, the smallest ticket, short term leases will have higher relative rates, purely because the fixed costs of completing a small ticket lease need to be recovered in a relatively short period and thus affects our final rate.  On any transaction that ALSO involves an applicant with weak or blemished credit, our relative rate will be higher still.

But there is more to it than that . . . . .

An equipment lease is accounted for different from a loan and it provides attractive tax benefits and other benefits that a loan doesn't.  Because it is not a loan, you won't find any reference to "interest." on our lease documents.

Our lease is a financing tool.  As such, there are carrying charges involved, but we are always very careful not to call them "interest."  Our carrying charges are very competitive, and in fact, WE GUARANTEE YOUR LOWEST LEASING RATES.

If you compare our leasing rates to a business bank loan, the lease rate would be very close to an otherwise comparable bank loan transaction.  (Remember that we write fixed-rate leases, so you should always compare leasing rate to a fixed-rate term loan at the bank.)

Most of the leases we write work out to be in the "middle teens" if expressed as a percentage.  Bigger tickets and longer terms can be in the very low teens, sometimes as low as just 6% to 7% or less.

That being said, we think it is a mistake to think only about the apparent "percentage rate" on a lease transaction.  There are several significant differences between our lease and a commercial bank loan, some of which are far more significant than a percentage point.  Specifically:

• Tax Benefits:  Our lease allows you to expense your new equipment, rather than capitalizing and depreciating it.

• Predictability:  Our lease payment is fixed for the term, not floating with prime.  And since our rates are lower NOW than they have been for years, NOW is a good time to 'lock in' a low monthly payment on your equipment.

• Ease of approval:  For good credits, we can approve up to $100,000, based on a 10-minute application which we can complete by phone, fax or on-line.  No financial statements or tax returns required.

• Speed of approval:  Typically we can approve your lease in 24 to 48 hours.  (If your bank and trade credit references cooperate, we can approve $100,000 in just a few hours!)

• Easy accounting:  For income tax and accounting purposes, Lease$mart's leases provide equal monthly "rental" payments and can be accounted for just that easily.  You don't have to calculate monthly principal and interest amounts.

• Leasing keeps your bank lines available for other purposes.  Remember that if you use $25,000 of your $50,000 (or $100,000) bank line of credit to acquire additional business equipment, you don't have $50,000 (or $100,000) of available credit at the bank anymore.

• Leasing doesn't interfere with future borrowing:  Our leases are typically shown as an expense -- a operating cost of doing business -- much like your office or shop lease or your payroll costs.  Bank loans must be reported as liabilities and can adversely affect your balance sheet financial ratios.  The lease won't usually have the negative effect on your balance sheet that a loan or debt would.

• No down payment:  Most commercial term loans will require a down payment of 10 to 25%, PLUS sales tax, delivery & installation charges paid up front.  With our lease, we can usually include all of those costs and pay nothing more than 1 or 2 month's lease payment and a small documentation fee to acquire your equipment.

• AND one more difference:  Have you asked your banker for a loan lately?  Unless you can prove that you really don't need the money, they just don't seem to be as interested in making the loan as they used to.

Comparison Shopping?

We encourage the same care and consideration in comparison shopping for your equipment financing that you would in shopping for the equipment itself.  Just as you would consider such things as quality of the equipment and the reputation of the companies who made and sell the equipment, consider the attributes of the financing, as well.

• Are there income tax considerations in the transaction?  (Care must be given to preserve tax benefits in the structure of any lease.)

• Does the bank and/or Lessor understand your current situation, your needs and objectives?

• Can they be resourceful and creative in their solutions to help you grow your business?

• Is the financing provider reputable and able to provide dependable continuing service for the life of the account?  (Will your account be transferred or sold over and over again?)

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