Interested In Achieving Best Leasing Rates & Financing With Canadian Lease Companies?

Updated: June 12, 2011

And oh yes, some extra tips on ensuring some additional benefits not readily known to everyone would help also, and we'll be sharing those also.

Most business owners know intuitively that they should be leasing - one simply reason is that millions of other firms are also .They simply are looking for a better or easier way to understand what makes a ' perfect ' lease financing transaction .

Ways in which you can determine what level of pricing and prompt credit approval you can achieve focus around some very basic issue - for example, do you want to own the asset, or use it. Just that decision alone will save you thousands of dollars and significantly impact working capital. Lets use a ' real world ' (that's where we work every day) example.

Let's say your company requires some significant plant equipment as an example. The cost is, say $300,000.00. You're not entirely sure you can afford the asset; you simply know you need it, and you are perfectly sure you can't afford to pay cash for it. Imagine what that would do to your bank line of credit or cash on hand!

Using our example the monthly payment on a 3 year lease would be 9338$ approximately. We estimated an interest rate of 8% on the transaction. Let's say you determine that you can afford $7000/ mo, but not $9338. Does leasing provide a solution? ... It sure does?

Ask you lessor to determine the term you need to change the lease to, allowing you to fit your payment. We've done the calc for you, and its 51 months. And, guess what, by committing to a longer term you can usually get a lower interest rate. Lessors like when they can guarantee their yield for a longer period. No surprise here, as that's how they make money.

We don't necessarily agree, but most clients we talk to are ' only ' focused on the lowest pricing or monthly payment in trying to achieve those best leasing rates. Lease financing companies consider a number of factors when offering you those rates.

So what are the key issues in lease pricing, and, more importantly, which of those can you as a Canadian business owner and lessee impact upon?

All assets can be financed, subject to credit worthiness. However, some assets depreciate slowly, some very quickly (think computers!), and some assets both hold their value, or even appreciate in price. Asset class plays a big factor in lease pricing, so be prepared to position and defend your asset quality.

Useful life of the asset is somewhat the same; don't expect to get a 5 year lease at great rates on state of the art computers or telecom unless your firm has a stellar credit rating.

If your firm is entering into an operating lease it is highly recommended that you arm yourself with the best possible date on residual values of the asset at any future point in time. That will allow you to negotiate a higher residual, and achieve best leasing rates and financing.

We noted there are some aspects of leasing rates and pricing you simply won't have an effect on. It should come as no surprise that leasing companies borrow money also. Their cost of funds and their required ' yields ' determine... your lease pricing. (As well as your credit quality of course)

So we can make a broad general statement that best leasing rates are achieved by dealing with larger more well capitalized lease companies in Canada.

In many case small admin and processing fees can add up and drive up your leasing rates. Negotiate hard and determine if these additional add on type charges are really necessary and if you can avoid them your pricing will improve.

Featured Research
  • 2017 Contact Center Software Cost Guide

    Are you paying too much for your contact center software? Are you satisfied with its capabilities, or do you wish it did more? These are questions most businesses don’t take the time to think about, even though contact center software is one of the most important investments that you’ll make. With a little bit of planning, you can end up saving money and still end up with better functionality. more

  • What You Need to Know About VoIP Security

    No matter the industry or area of expertise, a strong VoIP system is the perfect tool for any business looking to take both its internal and external communication to the next level. more

  • Are You Using These 5 VoIP Features?

    In large part, the success of your business depends on the strength and reliability of your team’s many communication networks—this includes your Voice over Internet Protocol system (VoIP). more

  • Video Conferencing Best Practices

    Video conferencing is quickly becoming one of the most important communication channels for both small and big businesses. As more businesses turn to this technology, expectations about the experience are also rising. It’s not enough to just offer video conferencing as a communication method. You also need to meet minimum audio and visual standards, and there’s even proper etiquette to consider. more

  • 10 Contact Center Myths Busted

    For most forward-thinking companies, the use of contact center software is on the rise. That said, in spite of contact center software’s sudden rise in popularity, a number of myths have begun to take shape. more