Smart Equipment Leasing Strategies - It's In The Fine Print

Source: EzineArticles
LeaseSpeak.com

The U.S. Department of Commerce continues to cite what business owners and financial managers already know: rapidly changing technology and cost-containment issues have spurred phenomenal growth in the equipment leasing market. Despite current economic difficulties, Global Insight, Inc., predicts that over $1.15 trillion in equipment will be acquired during 2009. More than $672 billion will be financed using loans, leases and other financial instruments.

Eighty percent of U.S. companies lease equipment to add or upgrade and stay in step with the changing landscape of business, especially in the area of technology. Fifty-nine percent of all businesses that finance equipment report they will lease computer equipment and 37 percent say they will lease software. Digital printing equipment is the most common equipment leased in every printing company.

However, not all equipment leases are the same. How can you protect your company? Whether your company is small, midsize or large, avoid technical obsolescence without overspending by learning to bring financial and technical matters into line with the business issues. By trimming hidden fees, it is possible to cut five to 15 percent from the cost of leasing equipment, whether it is a laptop or desktop computer, molding equipment, printing press, fork lift or digital copier.

The first step to paring costs is awareness. You hold the power of negotiating financial terms in any lease agreement; in turn, you hold the power to save hundreds, thousands--even millions--over the life of the lease.

Here are eight smart leasing strategies to save time and money.

1. Find a natural fit. There are many types of leases and leasing companies. All offer variables that affect the bottom line, and all contain benefits as well as potential pitfalls. Shop for the company that helps you get what you need when you need it--at the right price. In theory, the leasing company wants your business and will not jeopardize the relationship because of a few fine points related to financing. The manufacturer's leasing source may not offer the best priced financing package it often is an easy option to choose.

2. Reduce up-front costs and monthly payments. Focus on the best price for the equipment, not the monthly payment. Always negotiate with the equipment sales person as if you are a cash buyer. In that way you are assured that you remain focused on the asset price. The financing negotiation will follow later. The best monthly payments and terms are driven by the purchase price you negotiate.

3. Adjust the payment schedule. After the cost of equipment is negotiated, payment terms are also key to cost savings. Request the payment plan that fits your cash flow projections, whether it is monthly, quarterly or annual. If equipment operators experience a learning curve, structured lease payments may be helpful. Consider lower payments during the first three to six months.

4. Understand buy-outs. You may believe you can buy equipment at the end of the lease for "about 10 percent" while the lease states "in-place and in-use fair market value." The difference can be significant and costly.

5. Avoid hidden penalties. Penalties as high as 60 percent that lurk in return provisions, upgrades, deadlines, cancellations and automatic extensions are negotiable and avoidable.

6. Beware of the "Perpetual Lease." Chances are, you will not be notified that the original lease term has ended. The lease may automatically extend or renew, trapping you in added payments or a costly "Evergreen Lease."

7. Ask an expert. Consult a lease review expert to bring financial and technical matters into line with legal issues--before you sign.

8. Never too late to negotiate. Even if you are in a lease, there are still negotiable items such as late payments, end of lease purchase prices, relocation fees and return fees.

Look For Equipment to Lease Now

Used car dealers adapting to changing market

The following interesting article appeared in a USA newspaper. After reading it please provide your comments on whether you are holding on to your vehicle and just making repairs, or you are taking advantage of the incentives provided by new car makers, or you ar finding the best deals on used cars, trucks, SUV's or lease takeovers.

By GARY PINNELL
Highlands Today
Published: May 13, 2009

SEBRING - In a poor economy, new car sales decline, but used car sales improve.
Well, that was the traditional thinking. This is the new economy.

"These times are so tough that consumers are even discouraged from buying used vehicles," said Dale Buss, who blogs for industry watcher Edmund's Auto Observer. "This may be the worst year in two decades for used car sales."

There are two reasons, both linked to the recessionary economy:

•With a few exceptions - new car sales are down from 30 to 50 percent, according to a Reuters analysis.

•New car deals are so generous, they're actually cheaper than the one-year-old used version of the same model, said Edmunds.com CEO Jeremy Anwyl. "This is an unusual economic event," Anwyl said. "It can actually be less expensive to purchase a new car than a used car."

Economic adjustments

Used car dealers aren't giving up, they're fine-tuning. "We're lightening our inventory," admitted Jeremy Leach, a salesman at McPhail's Auto Sales, a lot on U.S. 27 in north Sebring. Used car sales are down 30 to 50 percent, Reuters said, a figure Leach agreed with. "People are fixing their used cars instead of trading them in," Leach said. "That's what I'm hearing from them."

Even so, a good used car is getting harder to find. "If you want something that's nice and clean," Leach added.

Used car dealers rely on new car dealers to call when they take a trade-in with too many miles. But because new car sales are down, there are fewer trade-ins.

Calls from new car dealers are down 50 percent, Leach estimated, and Alan Jay Wildstein said rental companies are holding their cars longer, too. Also, new car dealers - who sell used cars as well - are keeping used cars that were considered marginal in the old economy. "And cars are so much better than they used to be," Wildstein pointed out. He owns new car dealerships in Sebring and Avon Park.

Years ago, a car with 60,000 miles was considered near the end of its life, Wildstein said. Now Kia and Hyundai, for instance, offer a 10-year, 100,000 mile warranty. "We are wholesaling less vehicles," Wildstein said. "That being said, we're not keeping the secondary cars." "We want to have some higher mileage vehicles for customers who can't afford a one-owner, low-mileage car," said Stanley Wells, co-owner of Wells Chrysler in Avon Park.

At the same time, customers are shopping for older cars these days, Leach said. In previous years, McPhail relied on one- and two-year-old cars. Now, they're selling more three- or four-year-old models. "That's what customers want, so that's what we're carrying," Leach said. "Most of our inventory is under $10,000."

Better times

Two events have improved sales though, Wildstein said. Gasoline is $2 per gallon cheaper than it was six months ago, and as a result, customers have returned to buy light trucks and SUVs. And their trade-ins are worth more. "They were upside down," Wildstein said. Interpretation: when gas was $4.25 a gallon, even gently used SUVs and trucks often were worth less than was owed to the finance company.

"They don't have negative equity anymore, so that's made the market better on the truck side," he said. And because the market is stronger, dealers are again keeping used SUVs and trucks.
"Compared with new vehicles sales - which are at lows unseen in decades - the used car market is doing well," said Buss, observing another new economy trend. "Desirable used vehicles are becoming harder to find, pushing up their prices, while today's new cars are heavily discounted."