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LEASING
Q: What is a lease?
A: A lease is an agreement by a customer (called the lessee) to pay a monthly rental payment for a specific amount of time for the right to use rental property owned by the lease company (called the lessor). The customer is responsible for insurance, maintenance, and all other costs of ownership.
Q: How often are lease payments made?
A: Payments are structured to meet each customer's needs. They can be made monthly or seasonally, depending on a business' cash flow and requirements.
Q: What happens at the end of the lease term?
A: This depends on the lease structure that a customer chooses. Most of Barklay Capital's leases have $1.00 or 10% buyouts, so the purchase option is set. For transactions structured with a Fair Market Value purchase option, the buyout will be for the market value of the equipment at the end of the lease.
Q: Are lease payments a tax write-off?
A: Typically, with a Fair Market Value lease option, the IRS will allow the customer to write off 100% of the lease payments as an operating expense. It is recommended that customers consult with their tax advisors for the specific application regarding their business.
Q: Can I finance 100% of the purchase price? My bank requires a 10%-20% deposit.
A: Yes. Barklay Capital will finance 100% of the purchase price ’Äî no down payment is required except in special cases.
Q: Can service and installation costs be added to a lease?
A: Yes. Installation and service fees can normally be included in the lease as well as the maintenance contract.
Q: What is the difference between a lease and a loan?
A: A lease is an agreement to make payments for a specific amount of time for the right to use the equipment owned by the lease company. A loan is amortized over the term, which only allows customers to right off the interest. A loan also asks for a 10% to 20% deposit up front, whereas a lease can finance 100% of your loan.
Q: What is the interest rate in a lease?
A: Lease rates are different from interest rates. Since customers are leasing and not taking out a bank loan to finance their purchase, there is no "interest rate," per se. With leasing, customers pay to rent equipment, with the monthly payment based on the type of leasing plan the customer chooses, the terms of the lease, the cost of the equipment, and the individual's business and personal credit histories.
Q: When does the lease start?
A: The lease starts when Barklay Capital receives acknowledgement that the customer has received the equipment and it is in good working order.
Q: Who owns leased equipment?
A: The leasing company as lessor is the owner of the leased equipment until the customer chooses to purchase the equipment at the end of the lease term.
Q: Why should I lease instead of pay cash for equipment?
A: Suppose a customer takes the cash that he or she normally uses to purchase the equipment and instead re-invests it in their business? This cash could be used to advertise, purchase inventory, and train or hire employees. The return on these investments typically are around 20%-25%.
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