| Responses to Common Questions | |||
| Leasing helps you overcome pricing and budget objections …but what if your customer still questions or objects to leasing? | |||
| I already have a leasing company. | |||
| You always want to control the sale. When you partnered with Oakridge Leasing, they are committed to helping you increase your sales. If your customer takes the deal to another leasing company, you do risk the chance of loosing the sale, since that leasing company may prefer your customer deal with one of their vendors. | |||
| Cash is cheaper than leasing! | |||
| Actually it is not. With cash, you are paying with after-tax dollars. For example, if you were at a corporate tax rate of 35%, if you bought equipment for $100,000, it would have actually cost you $135,000. More interesting yet, if you did a lease and you decided to buy it at the end of the term; you would have only paid $94,630 for that same piece of equipment. | |||
| I can get a loan at the bank! | |||
| Two things can happen here. First, you are losing control of the sale. There have been times where the “banker” knows a guy who can get it cheaper, and the customer went elsewhere. You always want to take the deal off the street! Secondly, using a loan not only ties up valuable, irreplaceable lines of credit, it prevents your customer from using the money for more profitable purposes. Remind your customer that equipment is a depreciating asset, if they want to use their bank lines (or cash) they should look at buying the building or land, which can appreciate. | |||
| I don’t want to lease, I want to finance… | |||
| Leasing is just a flexible form of financing. You make fixed monthly payments for a specified term. Leasing provides 100% financing, with a very low startup cost (usually only 2 monthly payments) and can include items such as delivery, installation, support agreements, and sales tax. | |||
| But I want to own the equipment.. | |||
| With leasing it’s easy to own the equipment. After you have finished making the lease payments, you may own the equipment for $1.00, 10% or FMV (Fair Market Value) purchase. The great thing with a FMV (or 10%) is you get lower monthly payments up front, then you can pay the 10% in effect with lower, future dollars (i.e. $5,000 today is actually the equivalent of $3,500 in 5 years!). | |||
| What are the current leasing rates! | |||
| Since there are so many types of rates, including “effective”, “stream”, “annual”, “add-on”, “yield”, etc… with leasing you normally will not be quoted a rate. You will be given the bottom line…what the actual payment is. This way you can easily calculate how the investment fits within your budget and profit goals. In addition the IRS will disallow the tax deductibility of a lease if an interest rate is disclosed. | |||
| Can I write off a lease?* | |||
| Leasing offers many possible tax savings, whereas loan payments are not fully tax deductible. If the lease is structured to meet the IRS guidelines, you can write-off the entire payment. Regardless, Lease interest is always tax deductible. | |||
| *please consult your tax advisor as to how this may apply to your situation. | |||
| How long does it take to get approved for a lease? | |||
| Most applications for $75,000 or less ($150,000 for our medical program) have an approval status within 24 hours of receiving a completed one-page credit application. Larger leases usually have an approval status within 24-48 hours. | |||
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