Freedom Financial Leasing Corporation :: Frequently Asked Questions

Why lease versus paying cash? When considering financing, many follow the business rule to invest in assets that appreciate and finance those that depreciate. When financing assets that depreciate such as high technology, the obsolescence risk transfers to the leasing company.

Example: $25,000 is available in cash to purchase equipment. Consider the following example if investing that same $25,000 elsewhere. Invest the $25,000 in an aggressive five year investment with an average return of 15%. After five years, the $25,000 is equal to $50,284. then finance $25,000 in equipment in a five year lease with a monthly payment of $517.50 and an end of the lease option of 10% with a one time origination fee of $250.

The cost to lease, not including the 10% option is ($517.40 x 60) +$250 = $31,300. Comparison:

Why lease versus a loan? A loan typically offers the most competitive rates but depending on the size of the transaction and the business' cash flow, borrowing from a bank may not be the best choice. Bank lines of credit are a precious commodity and leasing can preserve those lines. Some of the benefits of leasing include:

What financial or credit information is necessary? For leases under $75,000, usually a standard lease application is sufficient. For leases over $75,000, we need an application in addition to your current financial statement. If you don't have a current statement, or if it isn't reviewed by your accountant, you may substitute tax returns.

Can I stop the lease? The lease is non-cancelable. However, if you need new equipment or need to upgrade, we'll structure a new Upgrade Lease. If you need to terminate the lease, we'll figure a buyout. You could then either pay the buyout and return the equipment or pay the buyout plus the purchase option and keep the equipment.

Frequently Asked Questions (FAQ)