Leasing Machinery: Avoiding Common Mistakes
William Sampson at Cabinetmaker FDM.com interviewing William G. Sutton, Kevin Mellon and Joan Peterson:
For budgeting and cash flow reasons: 7 Out of 10 businesses use financing to purchase woodworking equipment, in one form or another, according to William Sutton.
Avoiding common mistakes.
“For those businesses that want to stay competitive, it is critical to be strategic about how you acquire equipment,” said Sutton. “Lease financing is a viable option for acquiring equipment and it’s important to know the ins and outs so that you can negotiate what’s best for your company. The more questions you ask, the more information you will have in order to make an informed decision about lease financing.”
He listed these key areas that would-be equipment buyers should always consider before making financing decisions:
– How will the equipment be used?
– How well does the equipment finance company representative understand my business?
– What are the total lease payments and costs?
– What happens if I want to change or end the lease early?
– What is my responsibility if the equipment is damaged or destroyed?
– Do I have any other obligations for the equipment?
– How can I upgrade or add equipment under this lease?
– What are my options at the end of the lease?
– What procedures must I follow if I choose to return the equipment?
– Are there any extra costs at the end of the lease?
In line with that Mellon and Peterson say “customers not doing due diligence on leasing companies” is one of the biggest problems they encounter. They also caution buyers about “working with lenders who offer approvals with an ‘application fee’ that most times never gets returned if the deal does not get approved or does at a much higher rate that quoted.”
Sutton perhaps sums up the issue best when he said, “For those businesses that want to stay competitive, it is critical to be strategic about how you acquire equipment. Lease financing is a viable option for acquiring equipment and it’s important to know the ins and outs so that you can negotiate what’s best for your company.”