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The Basics of Leasing

Did you know that over $100 billion dollars worth of equipment is leased by businesses each year? Is your company a candidate for lease financing? Mantis Financial leases all types of equipment to many types of businesses, and would love the opportunity to discuss how lease financing might benefit your company.

The equipment leasing business continues to grow. According to Fortune magazine, leasing is bigger than stocks, bigger than bonds, and bigger than commercial mortgages. Over the past decade, the average volume of equipment leasing has increased sixfold. It is now the fastest growing mode of equipment financing.

A lease is simply another form of financing equipment for businesses. The most common types of leases you should know about when considering leasing are:

  1. Terminal Rental Adjustment Clause (TRAC) Lease - Specialized lease for titled assets. Designed for the business owner or commercial fleet who drives more than the average 15,000 miles per year. This lease is structured with no excess mileage/no wear & tear penalties.
  2. Fixed Puchase Option (FPO) Lease - Permits purchase of the leased asset at the end of the original lease term for a fixed percentage of the original cost (usually 10%).
  3. Fair Market Value (FMV) Lease - Permits purchase of the leased asset at the end of the original lease term for the assets' then determined fair market value. FMV is determined by appraisals, trade journals, and experts opinions in that specific equipment category.
  4. Dollar Buyout Lease - This lease is tailored to customers who want to own specific pieces of equipment at the end of the lease term. Instead of going through the hassle of getting a bank loan or using your own working capital, the asset is leased and then ownership is transferred at termination for a small fee of $1.00.

Leases can be custom-tailored to fit the specific needs that your company desires by acquiring equipment through lease financing. Here at Mantis Financial, we can answer many of the questions you might have concerning what lease is right for your company. Please call us with any questions or, if you would like, we can send your company a free, no obligation proposal on what we can do for you.

* Different purchase option alternatives can possibly affect the Lessee's tax and accounting treatment of leasing transactions. Mantis Financial suggests Lessees seek complete & professional tax and/or accounting advice because Lessees are ultimately responsible for the tax and accounting treatment of leasing transactions on their books.

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