Equipment Financing & Leasing Might Be Right For Your Business

[Jacob T.]

Hello everyone,

I am new to this forum but not new to the heavy equipment industry. I work for JKE Leasing, we specialize in financing small and mid-ticket assets up to $250,000.

Equipment financing and leasing is a great option for businesses and offers many benefits including tax deductions.

I'm posting this thread because I would simply like to offer my time to anyone who would like to know more about equipment financing and leasing options. Please reach out to me through this forum or direct with any questions the you have.

Wishing everyone a great day!

 

[John C.]

Can you tell us how you calculate residual values on long term leases?

 

[Jacob T.]

Hey John, nice to meet you.

No longest lease on equipment that we offer at JKE Leasing is 60-months. How we determined our residual value differs by asset categories and the fair market values of the equipment. The Salvage value is determined and listed in our Lease Agreements (this is not my area at the company) at time of approval.

We offer both capital lease and operating lease agreements:
Capital Lease ($1.00 Buy-out) - These build equity and ownership while leasing with the option to own the asset for only $1.00 when the lease-term expires.
Operating Lease (FMV Buy-out) - These lease agreements give the ability to either purchase, continue leasing, or return it. The buy-out for these is 10% of the FMV of the asset.

Do you work with the underwriters do help them determine these values?

 

[John C.]

The machine at the end of 60 months shouldn't be salvage I would hope. Do you determine residual and FMV in house or do you use an independent third party. Do you have machine condition requirements at end of the lease and if so how do you establish something is outside of the specified condition? Do you do the return inspections in house or hire a third party? Do you have early buy out penalties on top of the buyout of the lease.