Response to Andrew
Hello,
I just wanted to touch base with you on this post. You are correct, there are alot of fishy people in the money industry. We for one, do not ask for upfront money at all. Like any loan/lease, you should read AND udnerstand everything. Yes, finance companies make money, that is the point. But good finance companies, have no issues not charging upfront fees. Yes, like loans, there is a payoff due. With a lease, the leasing company buys the equiptment for the borrowers behalf. The contracts (with any company) will be to pay off the contract in full like you would a loan. With a loan, you don't get a free and clear piece of machinery, after a couple payments.
Is leasing the best route? It really depends. Credit, cash down, use ect...When I was a commericial officer at a bank, we required 20-30% down for equipment. Most people can't afford this and if they can, most CFO's understand the tax benefits of a lease and will elect to take a lease even with large downpayments. Leasing is usually alot more flexible in regards to credit, time in business, equipment type, ect.
There is always a trade off for different financial situations. Leasing would not be around if there was not a huge need. Like Andrew states, look out for shady leasing/finance companies. Never pay upfront fee's to get a deal approved. Work with reputable dealers as well. In trying to calculate rates, there isn't an interst rate on a lease. There is a factor that is used and yes, you can run calculation to see what a comparable interest rate is. I don't think anyone would have an issue that really needs a piece of machinery to increase business to lease. Let's say for example you wanted to buy a dozer for 50k. A bank will require 20% down at least or 10k cash down. A lease, you may pay 1st and last payment. Also, if there are upgrades, shipping, taxes ect, a lease can include these in the financing. As always, understand what you are getting into with ANY financial transaction and don't sign anything until you do.
I have worked in Billings, MT for over 10 years in the finance world as a commerical loan, real estate loan and licensed investment broker. Feel free to google my name. Best of luck!