One of the concerns in business operation is to provide vehicles for operational use. The businesses that needs vehicles may choose to get a vehicle by outright purchase or through leasing. The former is like buying a vehicle in cash or in installment arrangements and the intention is to fully own the vehicle while the latter is leasing  arrangement where the vehicle company still owns the vehicle but is offered to the client as leased item. The client then pays a deposit and leasing fee in a regular basis. Usually the arrangement of lease is flexible with the customer’s paying capacity. Each model or brand of vans has leasing price. What matters is that you don’t need to raise high capital for vehicle purchase. With van leasing, you just need to raise required deposit and ensure that you get regular earnings to compensate the leasing fees to be paid regularly.

 

The major disadvantage of van leasing is that you have no ownership of the vehicle. As such, you are most likely subject to conditions and terms of usage for the vans. In cases of breakdowns, you are obliged with policies governing breakdown cause by one of your business operations. Despite your effort and money put into the repair, you still don’t own the vehicle. Second disadvantage is that you get to lease used vans. Used vans may not be in good driving condition anymore so it would be detrimental to your business operations.

 

However, the advantage of van leasing outweighs the disadvantages. First, your payment option is flexible with your terms. Whilst owning brand new vans for your business requires big capital, you can be have a vehicles and be operational already with van leasing.  You don’t have to wait until you get big amount to buy vehicles for the business since van leasing only requires deposits and leasing fee paid on a regular basis. There are also arrangements with van leasing companies that suit your current capacity to pay. Second advantage is that van leasing may be using used vans, but these are refurbished models that are definitely useable to new clients. Van leasing companies usually provide used vans to clients since these are vehicles that have previously been leased by other clients. The remodeling of the used vans makes it look like the new user is getting brand new vans for lease. Different models, brands, and sizes of vans has different leasing price so there is definitely one that suits the needs for your business. If your business is into stocks delivery for example, you can find vans that match the distance of your commercial deliveries, the capacity of the stocks usually carried in the van, and the period that you want to use the van for such a routine. Third advantage is that since you don’t own it, you can definitely use another new vehicle if you need to replace the existing one. Vans, just like any vehicles, depreciate. So before it cannot be used anymore, you can readily return it and use another vehicle for continuous business use. If you own the vehicle, you will have problem disposing it to buy a new one or you may be spending money for too much maintenance just to make the depreciated vehicle continuously useable.

 

There are many companies for van leasing to choose from. You just have to check their services and their period of expertise in dealing with commercial vehicle leasing so you’ll get maximum service for your business needs.

 

 



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Equipment Leasing Overview

Equipment is a fundamental part of any business, whether small or large. It is with equipment that businesses render the services that they do. The quality and quantity of equipment a company uses, together with how the company deploys such equipment makes the difference between success and failure in a highly competitive economy.

When it comes to the hardware of a business, companies often prefer to go the extra mile to purchase equipment that will give them an edge in whatever industry they operate. While this quest for better machinery is laudable the methods in which it is obtained are not.

Purchasing equipment off manufacturers’ shelves is a decision most companies choose to take and they do so quite wrongly. In a business, the value of an asset is in its use and the value of that same asset depreciates with its use as well. Equipment is an asset, which satisfies this truth only too well, you buy some expensive piece of machinery, which looks good on your balance sheet, and in the next 4 years its value depreciates to nothing.

Equipment Leasing is the correct option as opposed to buying when your company needs equipment. Equipment is a tool that must be used to its maximum capacity to provide the service your business offers. In this light company should aim to save themselves the wanton waste of money that goes with purchasing equipment and should explore the benefits that come with leasing equipment instead.

Leasing equipment is not an aim at cutting corners or reducing the needed service quality delivered by a business. Equipment leasing is a proactive means of increasing your company’s cash flow that would otherwise be tied down if you considered the purchasing option. This cash flow could impact on other areas of your company’s business and improve your company’s balance sheet in the profit columns. Cash should not be tied down in a quickly depreciating asset such as bought equipment.

Benefits of Leasing

If you’re considering leasing equipment for your company rather than buying, you’re not alone. Statistics have it that over 80 percent of U.S based businesses lease their company equipment as opposed to buying, so you can remain rest assured that it’s a wise decision. To support this fact we offer you some of the financial benefits of commercial equipment leasing.

Financial Benefits of Leasing

These financial benefits of leasing cover how leasing helps your business improve its financing either by saving money or making more money for your company. The list is hardly exhaustive but the points examined here are the strongest and reflect the areas of finance that are most important to a business.

Increased Working Capital – With equipment leasing you save yourself the cost of buying the equipment outright. The money you save from purchasing the equipment can be deployed into other areas of the business. Obtaining a business equipment lease also preserves the line of credit you have from your bank as the financing you use to obtain the leased equipment is much lesser outright purchase. By saving this money you can improve your business edge with the right equipment, turn a better profit and not only retain your existing credit line with your bank but improve it as well.

Improved Balance Sheet – In business the balance sheet is an all too important area of determining performance, not only to your shareholders but also to people who provide major financing such as banks and prospective investors. This improvement comes in various areas: first of all business equipment leases are not recorded as liabilities and thus do not have a bearing on your capital figures. The second area covers the fact that a fixed equipment lease eliminates the need for depreciation, if you had purchased the equipment the cost of the equipment is written off according to use and affects your balance sheet calculations.

Tax-Related Advantages – With a commercial equipment lease your expenses are listed as direct operating expenses, which ultimately lead to a lower taxable income for yourself and your company. Another advantage that makes sense when you compare your leasing arrangement to a purchase is that if you had purchased the equipment, sales tax would then be applied and added to the costs accordingly. In some cases when you lease equipment, sales or use tax is then deducted according to the use of the leased equipment. Whatever the case you should consult with at tax professional to examine the benefits that apply to your company specifically in a lease situation.



Quick Property Sale

Are you having difficulty selling a property? Would you like to buy a home or an investment property but you don’t have enough cash for a down payment?

If you answered yes to either question, a lease with option to purchase (lease-option) can solve your problem. But it’s important to understand the pros and cons of lease-options to maximize your benefits.

A lease-option is a combination real estate rental, sales, and finance technique. It is a property lease for a fixed time period, such as 12 or 24 months, with an option for the tenant to buy the property at an agreed option price during the lease term. (Lease options are sometimes also called “land contracts.”)

In general, the lease-option technique is one of the quickest and least expensive methods available to investors for buying and selling real property. The purchaser is not required to conform to the various underwriting guidelines that banks and other lenders require. The seller, unlike an underwriter working for a mortgage company, requires little in the way of documentation. The seller providing the financing doesn’t care where the money for a down payment comes from as long as it comes from somewhere. After all, to the seller cash is cash.

Buyers like lease-options because little up-front cash is required. Sellers also like lease-options because they provide necessary cash flow to pay the mortgage and property taxes from a tenant who has a vested interest in treating the property well and who is likely to buy it.

A lease-purchase is different from a lease-option because it obligates the tenant to purchase the property at the end of the lease. With a lease-option the tenant has the right, but not the obligation, to purchase the property.

With both, however, the tenant usually pays an above-market rent and receives a monthly rent credit toward the down payment. And, of course, both a lease-option and a lease-purchase obligate the seller to sell the property at the previously agreed-to terms.

What hurdles will you face? It should come as no surprise that the biggest obstacle to a lease-option transaction is often the real estate agent. The reason is the agent receives only part of their commission up-front at the time parties enter into the lease-option. The commission balance is paid when the option is exercised. Many agents who can’t afford to wait for part of their commission don’t realize a lease-option is better than no sale at all.

Advantages for Sellers

Unless your property is located where there is very strong demand from buyers, lease-options can be especially advantageous for home sellers.

Primary property seller advantages are:

* Strong Demand from Prospective Buyers: No matter how slow the local real estate market might be, there is almost always good demand from lease-option buyers. Many prospective home buyers can usually afford the monthly payment but they often have insufficient cash for a down payment. The lease-option solves this problem by giving the tenant-buyer a rent credit toward the down payment. In addition, the tenant-buyer usually pays up-front, nonrefundable consideration for the option; typically several thousand dollars.

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* Top Dollar Option Price: Because of strong buyer demand for lease-options, home sellers can often demand and get top dollar for their properties. Usually the option price is set at the market value when signing the lease-option. If the market value of the home goes up during the lease-option term, the buyer benefits. If the property drops in value, then the tenant typically doesn’t complete the purchase. (That’s an advantage of a lease-option; there’s no obligation, just the right.)

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* Higher Quality Tenants: During the lease-option, the tenant-buyer usually takes good care of the property; after all, they’re hoping to own it someday. The average lease-option tenant will take much better care of the property than a typical renter will.

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* Above-Market Rent: Another seller advantage is earning above-market rent. Landlords can usually charge tenants 10 to 20 percent above market rent levels.

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* Seller Keeps the Tax Deductions: During the lease-option period, the seller retains all the property income tax deductions. If a tenant complains about not receiving any tax benefits, a reminder about the rent credit toward the down payment usually ends the discussion.

Advantages for Buyers

Lease-option benefits aren’t one-sided deals. Advantages for buyers include:

* Small Amount of Up-Front Cash Required: The amount of up-front cash needed to acquire a home or other property on a lease-option is usually small; often just a few thousand dollars for the first month’s rent plus non-refundable option consideration. This option money is in lieu of a security deposit.

* Monthly Rent Credit Builds a Down Payment: The unique characteristic of a lease-option is the rent credit toward the buyer’s down payment. Typically, the rent credit is 10 to 100 percent of the monthly rent, depending on how motivated the seller is to sell. The higher the rent credit percentage, the greater the probability the tenant will buy.

* “Try Out” the Property before Buying: Another special lease-option benefit for the tenant is the ability to try out the property before buying. If it turns out to be undesirable, the tenant hasn’t tied up a large amount of cash in a home that might be difficult to resell.

* Control Property with Very Little Cash: Buyers enjoy great leverage; they have the ability to control a property and profit from its market value appreciation with very little cash. Lease-option buyers have this unique advantage.

* Longer Terms Mean Greater Profitability: Although most residence lease-options are for short terms, such as one or two years, smart investors seek lease-options with the longest possible term. They assume the property is likely to appreciate in market value over the long term.

As a seller, you should try to collect the maximum amount of option money you can. The more the buyers or tenants have invested in your property, the better they will take care of it. And, if they decide not to exercise their option, you’ll keep the option money – so the more you get down, the more you keep.

The amount of the premium will vary depending on where your property is located. In general, an option premium can range from $1,000 to $10,000. Your goal will be to charge what the market will bear in your particular area.

As a buyer, on the other hand, your goal will be to pay as low an option premium as possible. Why should you invest more than you have to? Then, if the property appreciates in value, when you exercise your option your profits will be greater. In effect you can build equity in the house while you’re leasing it.

To help you understand the process, here’s an example of a lease-option. A buyer has signed a lease-option agreement for a single-family house that gives him the right to purchase it at any time during the next twelve months. (Again, he doesn’t have to buy the house; he has the right.) He agrees to purchase the house for $100,000, and he gives you a $2,000 option premium. If you give the buyer $100 in credit towards the purchase of the house from each month’s rent payment, at the end of the 12-month option period the buyer would have accrued a total of $1,200 in credit that could be applied toward the purchase price. (If you wanted to be more generous and offer the buyer $200 per month in credits, you could simply increase the price of the house by a corresponding amount.)

If he exercises his option at the end of the 12-month period, then his purchase price for the house is $98,800. If he doesn’t exercise the option, you keep the credit towards the purchase and the option premium (if your original lease-option contract is written that way).

A lease-purchase works in a similar way, except the buyer has entered into a contract to purchase the house; he simply hasn’t completed that purchase. If the lease-purchase contract is for 12 months, at the end of 12 months he must purchase the home or he is in default. You keep the option premium and any credits he’s accrued if he defaults.

The lease-option technique is similar to a purchase option in that it grants the right to investors to purchase property at a predetermined price within a predetermined period of time. The lease-option technique, however, combines the basic lease or rental agreement with an option to purchase contract. Whether you are a buyer or a seller, lease-options provide greater flexibility in structuring transactions while simultaneously reducing your level of risk.



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