Expecting The Best Lease Finance Rates In Canada . Here’s How!
OVERVIEW – Information on how the Canadian business owner/manager can achieve best lease rates from leasing companies in Canada when arranging equipment and asset acquisitions.
Here's where you are going wrong. When Canadian business owners and financial managers focus on getting the best lease rates from equipment leasing companies, they are focusing on ' where ‘... not ' how'!
The reality is that the current Canadian landscape is very competitive when it comes to delivering solid asset financing solutions to your firm and industry. So ‘creditworthy’ firms (hopefully yours?!) can expect and demand solid interest rates based on their own particular credit quality. So the thing you are probably working hardest to find is already there.
What is critical though, and often missed by the business owner/ manager is in fact how that rate is delivered in terms of structure, documentation, hidden fees, and the quality of the firm you are dealing with . When you master those you have achieved leasing Nirvana in Canada!
We continually remind clients that in fact your lessor has actually borrowed the money also, so they are focused, and it’s reasonable to assume- all the time, on maximizing the mark up in your transaction. Because that mark up is your profit.
Many lessees (that’s you!)don't know they can easily calculate the lessors profit on your transaction. How? Because the elements of any equipment lease in Canada are term, interest rate, monthly payment, value of the deal, and end of term obligation. Typically you are given all of those, except the rate! So by simply using a financial calculator you're in a position to determine the actual rate you are charged.
Often the most important part of your equipment lease is in fact the final payment. Why? Because it is at that time that it is determine what you signed up for in the documentation of the lease. And if you have entered into the wrong type of transaction (yes ' IT' happens) the actual residual value of the asset becomes the largest part of the profit component of your lease.
The above scenario is particularly true when it comes to your choice of type of lease, capital or operation. If you have chosen a fair market value, aka ' operating lease ' you is in fact obligated to return the asset to the lessor. And they then sell it to further increase their profit on a transaction.
Many business owners are to say least, surprised, you may say dumbfounded when it comes to being told they either have a very low or even 'negative' interest rate in their operating lease overall rate. Why? As we said the lessor is banking on making their profit a few years from now when you are obligated to return the asset.
By the way, don’t get us wrong, in many environments the operating lease is one of the best solutions in town when it comes to financing technology assets such as computers, telecom assets, etc. That’s because those assets are traditionally worth a lot less, sometimes even close to zero, when it comes to economic life/value. So if the lessor wants to take that risk off your back... let them!
One final point on operating leases - if you know what you are doing you'll construct your obligation so that the choice at the end of the term allows you to make the decision to buy, return, or extend the lease. All of those options are available to you, you just didn’t know it. Even worse, you weren’t told. Must have been a slip up, right?!
Our point today, simply that your credit quality and actual interest rate are pretty well predetermined in today’s competitive equipment leasing marketplace. Dealing with the right firm, and understanding the documentation you enter into is key to asset financing success. Focus on ' how' not ' where '!
Seek out and speak to a trusted, credible and experienced Canadian business financing advisor on equipment finance solutions that work... in your favor!
Stan Prokop - founder of 7 Park Avenue Financial –
http://www.7parkavenuefinancial.com
Originating business financing for Canadian companies , specializing in working capital, cash flow, asset based financing . In business 7 years - has completed in excess of 80 Million $$ of financing for Canadian corporations . Core competancies include receivables financing, asset based lending, working capital, equipment finance, franchise finance and tax credit financing.
Info re: Canadian business financing & contact details :
http://www.7parkavenuefinancial.com/leasing_companies_best_lease_rates_equipment.html
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