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LEASING EQUIPMENT COMPANIES
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Financing & Cash flow are the biggest issues facing business today
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EQUIPMENT LEASE FINANCING LEASE COMPANIES
Equipment lease financing and leasing companies in Canada. For almost too long that we remember we've heard objections from Canadian business owners and financial managers around whey they don't use or recognize the benefits of lease finance.
One of our old mentors in this segment of Canadian finance actually tabled these objections in a work he published. We thought we would dissect those objections with an emphasis on the Canadian leasing business, as his comments originally were general in nature; by we're Canadian, eh?
OVERCOMING OBJECTIONS TO A SUCCESSFUL EQUIPMENT LEASING STRATEGY
CASH IS NOT KING - WHEN IT COMES TO LEASE FINANCE
Objection # 1- Cash is king, and you like to pay cash and have pride in ownership. Well as our mentor noted, lease payments are made in cash also, it’s just that we've always felt that a smaller outlay of cash is better than a larger one in business.
THE COST OF LEASING
Objection # 2- Lease pricing. The reality is that lease pricing in Canada is credit-driven and that your rates are commensurate with your overall credit quality. In fact if you have bank quality financials you can actually receive lower rates than a bank term loan, certainly for larger transactions of good credit quality. We've been on the record that the overall structure and flexibility offered by leasing companies often far exceed any rate differential in lease finance via the equipment leasing company. Whether you are financing new equipment or used assets cost should always be a factor in your business capital decision when it comes to business needs.
LEASES VERSUS LOAN?
Objection # 3- You prefer loans. Well, that may well be, but you are of course adding debt to the balance sheet under that scenario. Oh and by the way, when you choose a capital lease full payout scenario you are very close if not at the loan scenario. The true finance lease is essentially a loan for the full amount of the asset.
PREVIOUS BAD EXPERIENCE
Objection # 4- You have had what our mentor called a ' bad experience '. Our point on this one is that you also may have a bad experience with a lawyer, accountant, or business or personal financial advisor. The reality is that you need to focus on partnering with a firm or individual that you trust when it comes to equipment lease financing in Canada. That goes for choosing a supplier, banker, etc. It's only common sense.
THE HELL OR HIGH WATER CLAUSE
Objection # 5- Hell or high water. What? A Hell or high water clause in commercial leasing indicates that you are obligated to pay the full amount of all remaining payments in your transaction. What's that, you want to change that clause. The reality is that with the proper negotiation a good lessor or leasing advisor has the ability to include in the transaction features that make sense to you when it comes to cancellation and pre-payment.
DOWN PAYMENT ON LEASE TRANSACTIONS
Objection # 6 - the proverbial down payment. You don't like it. Down payments with good credit quality are minimal or non-existent when it comes to equipment lease financing as well as choosing the proper lessor.
TERMINATION OF LEASE TRANSACTIONS
Objection # 7 - The lockdown . Many clients tell us that are unable to extricate themselves from their current lease transaction in order to move on to a more appropriate one. A variety of tactics can be utilized to refinance and move on . They include at the very lease refinancing the existing lease combined with the new one.
Conclusion
The Canadian leasing industry is a key part of Canada's future with respect to the competitiveness of the global economy. The industry positions itself as a key part of Canada's economic future.
Most lessees, your firm probably included feeling their company and industry is unique. That may well be true, but ensure you speak to a trusted, credible and experienced Canadian business financing advisor. You may well find those 7 objections to leasing companies and equipment lease financing in Canada are somewhat... unfounded, as well as discovering the valuable role a lease transaction can play in your business growth.
Click here for the business finance track record of 7 Park Avenue Financial Stan Prokop
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