Commercial Lease Solutions has the experience to offer you a multitude of different leasing options. We are happy to help you determine which type of lease makes the most sense for you or your customer. Clearly there are a multitude of variables that must be considered, not the least of which are how you run your business, what your plans are for the future, and how you intend to use the equipment you're about to acquire. Every financing situation is different, we are happy to speak with any past or new clients so that we may better serve your equipment leasing needs. For additional resources please refer to our Lease Dictionary, or contact us directly.

True Lease (also called a "Tax Lease"):
Under a true lease, the lessor is the legal owner of the equipment. For that reason, this type of arrangement can be particularly attractive for companies and professional practices acquiring equipment that is vulnerable to technological obsolescence, such as computers.

A true lease gives you a lower monthly payment for a given piece of equipment than a finance lease would, and in some cases, your business can claim the lease payments as tax deductions.

You have three options at the end of the lease term. You may purchase the
equipment for its fair market value (to be determined at lease end), continue to lease it, or return the equipment to the lessor.

Finance Lease (also called a "Conditional Sale"):
Unfortunately, a common misconception about leasing is that reguardless of lease structure, lease payments can be treated as fully deductable rent payments. This is not the case. The finance lease combines some of the benefits of leasing with those of ownership. Payments are spread over a period of several years and often represent the full value of the equipment. However, this lease structure should not be used if rapid tax benefits are desired.

The advantage of a finance lease is that you have the opportunity to own the equipment at the end of the lease, generally for a minimal payment, such as $1.00, or for a small percentage of the original equipment cost.

Operating Lease:
An operating lease is generally for a short term (typically three years or less) and is often used with high-tech or other obsolescence-prone equipment. In this type of lease, the lessor typically takes a significant residual position in the lease pricing, thereby bearing more of the risk of ownership. This, in turn, allows a lower monthly payment for the lessee.

Operating leases may qualify for "off balance sheet" financing for the lessee, in that the lease is recorded neither as an asset nor as a liability. In addition, the lessee has no further obligation with respect to the equipment once the conditions of the lease have been fulfilled. As with a tax lease, the lessee usually is given the option to purchase the equipment at fair market value. You should check with your accountant to learn if your leasing arrangement can qualify as an operating lease.

Skip Lease:
A skip lease has a repayment schedule that includes months when no payment is made (and no penalty is assessed). Ideal candidates for this type of lease are organizations that need a flexible repayment schedule such as seasonal businesses (agricultural or recreational services firms, for instance) and school systems.

60 or 90 Day Deferred Lease:
A 60 or 90 day deferred lease can be structured as a finance lease or a true lease. There is usually one advance payment required, and the next payment is not due until the second (60 day) or third (90 day) month of the lease.

This structure is useful for businesses that acquire income-producing equipment that takes a few months to begin generating revenue.

Pre-Paid Purchase Option:
This type of financing enables you to significantly reduce your monthly payments by pre-paying a percentage (10% or 20%) of the equipment cost. At the end of the lease term, the equipment is yours for a payment of $1.00. This option may also be used when a business is new or has a negative credit history.

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