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The following are some of
the most frequently asked questions by those seeking equipment lease
financing offered by TR Financial LLC.
- Is there a limited list of companies
that provide the equipment leased through TR Financial, LLC?
No. Equipment can be acquired from almost
any vendor. You choose the equipment and vendor that is right for your
company's needs and come to us to help make paying easier on your
budget.
- Can anyone Lease?
No, Leasing isn't for everyone. Leases
arranged by TR Financial, LLC are for business purpose only. The
customer looking for personal or household leasing is not eligible.
- How does a lease differ from a loan?
There are a number of great reasons to
lease vs loan:
| Loan vs. Lease
|
| LOAN
|
LEASE
|
| A loan
requires the end user to invest a down payment in the equipment.
The loan finances the remaining amount. |
A
lease requires no down payment and finances only the value of
the equipment expected to be depleted during the lease term. The
lessee usually has an option to buy the equipment for its
remaining value at the end of the lease. |
| A loan
usually requires the borrower to pledge other assets for
collateral. |
The
leased equipment itself is usually all that is needed to secure
a lease transaction. |
| A loan
usually requires two expenditures during the first payment
period; a down payment at the beginning and a loan payment at
the end. |
A
lease requires only a lease payment at the beginning of the
first payment period, which is usually much lower than the down
payment. |
| The
end user bears all the risk of equipment devaluation because of
new technology. |
The
end user transfers all risk of obsolescence to the lessors, as
there is no obligation to own equipment at the end of the lease. |
| End
users may claim a tax deduction for a portion of the loan
payment as interest and for depreciation, which is tied to IRS
depreciation schedules. |
When
leases are structured as true leases, the end user may claim the
entire lease payment as a tax deduction. The equipment write-off
is tied to the lease term, which can be shorter than IRS
depreciation schedules, resulting in larger tax deductions each
year. The deduction is also the same every year, which
simplifies budgeting (equipment financed with a conditional sale
lease is treated the same as owned equipment). |
| Financial
Accounting Standards require owned equipment to appear as an
asset with a corresponding liability on the balance sheet. |
Leased
assets are expensed when the lease is an operating lease. Such
assets do not appear on the balance sheet, which can improve
financial ratios. |
| A
larger portion of the financial obligation is paid in today's
more expensive dollars. |
More
of the cash flow, especially the option to purchase the
equipment, occurs later in the lease term when inflation makes
dollars cheaper. |
- Can non-equipment items be
included?
Yes. One of the many benefits of
leasing includes the ability to group equipment items into one
lease. Leases can include software, service and installation costs
so you can make one simple monthly payment for an entire system or
equipment line. You can even lease software alone.
- What are the approval requirements
of TR Financial, LLC?
We evaluate your business credit
history (including bank and trade references), personal credit
history of the owner(s) and value of the equipment. If your
credit history has some negative items, we often can approve a
lease with a shorter term and/or a down payment.
- Why are personal guarantees
requested?
An important part of our credit
decision is based upon the personal credit report of the owner(s).
These reports are usually very accurate and reliable, allowing
us to provide you with a timely credit decision. We have found
that the payment patterns of privately held businesses mirror
that of the owner(s).
- What happens after the credit
approval?
Once you are approved, we prepare
lease documents and overnight them to you. After you sign and
return your lease documents to us, we issue a purchase order
for the exact equipment that you have selected. Upon your
verification of delivery and acceptance of your equipment, we
pay the vendor and your lease begins. Your first payment is
usually due about 30 days later.
- How long are the lease terms?
Most leases are written for 24,
36, 48 or 60 months, depending upon the type of equipment and
your needs. Leases for items that depreciate rapidly (such as
computers) are usually shorter terms. Expensive, durable
machinery can be leased for terms up to 84 months.
- How much equipment can be
leased?
Typical lease amounts range from
$5000 and up into the millions. For equipment costing under
$5000 it is usually more cost-effective to use other means of
financing (i.e. cash flow, credit cards etc.) rather than
leasing.
- How are payments made?
Payments can be structured to
meet your needs. Typical payment schedules include the first
and last payments made at the time you sign your lease
documents, with your first monthly payment due about 30 days
after your acceptance of the equipment.
- What are the options at the
end of the lease?
You may purchase the equipment
for its purchase option amount, continue to lease, or
return the equipment with no further obligation.
- What end-of-term lease
purchase options are available?
We offer the following
purchase options to meet your needs:
- Fixed Percentage Option
- Fair Market Value Option
- $1.00 Purchase Option
The best option for you can
be determined after a brief conversation.
- What is the interest
rate on a lease?
Lease rates are based on
the term of the lease, the lessee's credit history
(both business and personal), and the type of
equipment being leased. The stronger and more
established your business, the lower your payment
should be.
- Who is responsible for
taxes?
The end user/lessee is
responsible for all taxes. We are required by law to
collect all applicable sales, use and property taxes
and remit them to each jurisdiction. Tax types and
rates vary by state and locality.
- Who insures the
equipment?
The Lessee is
responsible for insuring the equipment against risk
of loss including property and casualty coverage and
liability. Lessees usually add the equipment to
their existing policy.
- Who provides
warranty coverage on the equipment?
Warranty claims are
processed in the same way they would be if the
Lessee was the owner of the equipment.
- Can the lease be
cancelled?
No, leases are
non-cancelable agreements for the specified term
that you select at the beginning of the lease.
However, we can provide you the options to
upgrade, trade-in or buy-out your lease before the
end of the term.
- What if my
equipment becomes out-dated?
In the unlikely event
that you need to upgrade your equipment during
the lease term, we can amend your original lease,
assist you with a trade-in of your original
equipment, or structure a new lease.
- What information
must I provide to qualify?
For applications up
to $150,000 A simple, one-page application
completed and faxed, e-mailed or given over the
phone. For applications over $150,000 Last two
years' fiscal year-end tax returns and/or
financial statements.
- Do I need
perfect credit?
Although our best
programs are designed for business owners with
a good credit history, we understand many
credit-worthy applicants may have some credit
issues. Our experience and desire to work with
our customers has helped us develop advanced
programs for many levels of credit strength.
- How long must I
be in business to qualify?
Some of our
programs are for "start-up"
businesses, thus, there is no time in business
requirement. Other programs require a business
to be operating for at least two years to be
considered an "existing" business.
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