3 Types Of Equipment Leases

Leasing equipment has rapidly become more popular due to a number of advantages the process provides. Small businesses are able to get the equipment they need without breaking their budget or having to worry about where to store it. Companies can get the newest models of all of the different types of equipment without having to pay an arm and a leg. Maintenance costs are transferred to the company that is providing the equipment. There are three main types of equipment leasing situations. Check them out and decide which is best for you.

1. Financial Lease

A financial lease is when a company that needs the equipment signs an agreement with the company in charge of leasing. This agreement basically states that the company will keep the equipment for a certain length of time and pay money regularly throughout this period. Ordinarily, the charge for leasing is monthly, although some companies offer deals if you pay for several months at once. If the equipment being leased should break down before the leasing period has expired, then the company that provides equipment will send a replacement at no additional charge. This tends to be the most common type of lease.

2. Operating Lease

An operating lease is a lease that is signed by a company that needs to use the equipment for an indeterminate amount of time. There is usually a minimum number of months that the leasing company will have to agree to, but once the company is done using the equipment, they simply send it back. If the company uses the equipment for a very long time, they can choose to put some of the money that have paid on the lease towards actually purchasing the equipment. This makes it easy for companies to test-drive equipment and determine if it fits their needs.

3. Sale and Leaseback Lease

This lease is when one company purchases a piece of equipment and sells it to another company. The first company then leases the equipment from the second company. The reason why this lease exists is that it allows a company to get a piece of equipment, but still have funds to use for other activities, even though a lease is being paid. The first company technically owns the equipment the entire time.

For more information about the type of lease that is best for you, contact a loans and financing company like Westar Financial Inc today.