True Leasing

If you decide that an equipment lease is the way for your business to go when trying to get the equipment you need to run your business, you will need to decide which lease structure will best fit your needs. The most standard equipment lease structure is the agreement known as the true lease. It is a basic lease and is adaptable to a variety of circumstances and payment arrangements.

True Lease = Fair Market Value Lease

Another name for a true equipment lease is a fair market value lease. It is so named because the structure of the lease allows you to purchase the equipment at the end of the lease for its fair market value. The fair market value is the amount of money the equipment could reasonably sell for on the market. This is the only type of lease that requires that you pay fair market value at the end of the lease term if you decide that you want to own the equipment permanently.

Advantages of a True Lease

One of the advantages to an equipment lease structured as a true lease is that it offers one of the lower monthly payments than other options, and even some financing options (although if you buy the equipment after the lease expires, you will pay much more overall than you would if you had financed through a bank originally). And, because a lease is easier to obtain than traditional financing, you will find that you do not have to present a business plan or have good business credit. As long as your lease is less than $100,000, you should be able to get the equipment you need based on your personal credit and your willingness and ability to make the monthly payments. This has the added advantage of allowing you to maintain a reserve of capital for other expenses, as a true lease requires very little money up front and out of pocket.

The true lease also has the advantage of providing a tax deduction from some of the payments. This can help you save money in the long run by allowing you to keep more of what you make, rather than turning it into the government. As always, though, before claiming a deduction you should consult your accountant or a tax attorney to make sure that all of your ducks are in a row for deducting your equipment lease payments.

True Lease Versatility

A true equipment lease is also quite versatile. It is easy to add features like seasonal payments and deferred payments. This can give you valuable time to earn the money you need to make your payments in times where your revenue ebbs and if you are just starting a business and will not have a revenue stream for two or three months. If you have special payment needs, you can ask your leasing company to build these concerns into your true lease.

Finally, the true equipment lease offers the largest number of options when the lease is finished. You can buy the equipment outright, at fair market value, as discussed above, you can renew the lease on the same equipment, you can turn the equipment in and lease elsewhere or buy elsewhere, or you can upgrade to new equipment. The versatility of the true lease is the reason that it makes such a great base to work upon as you tailor your lease agreement to the needs of your business.