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FAQ About Leasing | Glossary of Leasing Terms

What is a lease?

In simple terms, a lease is a contractual arrangement between the lessee (the customer) and the lessor. We purchase the equipment from a supplier of choice and lease it to the lessee for fixed, regular payments for a fixed term with an option at the end. Generally, there are two different types of leases: a true lease and a finance 

Can I cancel a lease agreement?

No, a lease is non-cancelable. However, we will work closely with you to ensure your needs are met with early buy-out, add-on, or technology refresh options.

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When do payments start?

Typically, regular lease payments start 30 days after the lease documentation is completed. To meet the unique needs of larger customers, we can tailor invoice formats and payment schedules.

Do I need to insure the equipment?

Lessors require that customers insure equipment for its full replacement value and that proof of such insurance be provided. You may also require Life and Disability Insurance to cover the payment amounts should they be required.

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Can I upgrade or add on to my leased equipment?

In most cases, yes. This is one of the key benefits of leasing. Our goal is to provide the solution you need, when you need it.

Can the leased equipment be moved?

Yes, with written notice, if your equipment is in a secured environment.

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What’s the difference between leasing and financing?

The concept of leasing is widely accepted as a means of acquiring tangible assets such as computer hardware, construction equipment, vehicles, etc. A leased asset belongs to the lending company until you reach end of term. The lease holder makes monthly lease payments and at the end of the term, may purchase the asset or lease a brand new asset.

How is a financing rate determined?

The key considerations in determining the financing rate are:

  1. Number of years in business.
  2. If proper financial statements on the company are available.
  3. If updated information is available from commercial and personal credit bureaus.

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How does a lender determine the financing rate?

Credit Worthiness. The most important consideration is the credit worthiness of the business that is purchasing the software or equipment. Standard industry practice is to assign an “AAA”, “AA”, “A”, “B” or “C” credit rating. Factors such as years in business, size of the business and outside credit rating are considered in calculating credit worthiness. The lower the credit risk, the lower the rate that a Canadian business would expect to pay.

What is the range of deal size you will finance?

We finance opportunities that range from $5K to $5M. Our typical deal size is in the $5K-$150K range.

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How long will it take us to get a financing approval?

Assuming the documentation that is submitted is complete, we aim to return an approval or decline within 24 business hours.

What products and services do you finance?

As an example, we finance software and related professional services – packaged software. Out-of-the-box solutions that range from shrink wrap to enterprise software. We also finance industrial and business equipment: agricultural equipment leasing, commercial equipment leasing, business equipment leasing, etc.

Custom Software
These are custom solutions that range from customization of packaged software to legacy system integration to complete custom development solutions.

Website Development
Software related to website development. This may range from simple informational websites to content management to complete eBusiness solutions.

Professional Services
We will finance consulting, project management, maintenance contracts and other specialized professional services that are related to the installation and maintenance of software.
Click here to see what we lease

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Who can lease?

Any company, organization, association, or small business that has a need for equipment or assets for business or commercial use.

Who should sign the lease?

The lease should be signed by the owner of a sole proprietorship, an authorized officer(s) of a corporation, or by the duly authorized partners of a partnership.

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Who services or maintains the equipment?

The lessee is responsible for maintenance and receives the benefits of all buyer warranties.

What kind of equipment can I lease?

You can lease any business-related equipment. This can include, but is not limited to the following: photo-audio-video, broadcast, general office equipment, telephone systems, hardware, software, computers systems, office furniture, work stations, specialty equipment, printing, bindery, machinery, titled vehicles, video production and post-production equipment, printing and pre-press equipment, computer networks, peripherals, and any other business related equipment.

For any capital assets needed for your commercial business, chances are we can do it! We are also a source for many types of other equipment: car lifts, signs, medical-dental, etc. Click here to see what we lease.

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What is the interest rate on a lease?

A lease is not a simple interest loan, and therefore does not have an interest rate as we normally think it would. The amounts charged on an equipment lease are calculated using monthly rental rates. Rental rates are based on various factors that include, but are not limited to, the term of lease, lessee’s credit history, type of equipment being leased, etc. The stronger your business, the lower your rate should be. Connect Lease Corporation offers great rates that are very competitive. Obtain a free quote at no obligation and you’ll be surprised at how affordable leasing can be for your business.

What are the end of lease options?

You have a few flexible options to choose from; you may purchase the equipment for its purchase option amount, renew the lease for a specified period of time, or return the equipment with no further obligation.

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What Options are available?

We offer flexible purchase options to meet your needs: $1.00 buyout purchase option (which is treated as a purchase), fixed percentage purchase option (our most popular is 10%), and fair market value (FMV) purchase option.

What are the tax benefits associated with leasing?

From the lessee’s viewpoint, you may be able to deduct 100% of your monthly lease payment as a business expense on your tax returns. Consult with your accountant on this matter to find out if your lease qualifies.

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What taxes am I responsible for?

Closing costs, documentation fees and commitment fees may be required, depending on the transaction.

What kind of fees can I expect with respect to leasing?

A Lessor remits applicable sales and use tax directly with each monthly payment.

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What is the documentation fee?

During the lease process there has been incurring expenses such as credit reporting fees, lien searches, overnight delivery, administrative fees, PPSA filings, and papers required to be processed. A documentation fee is charged to help offset the expenses for your transaction.

What financing alternatives are available?

We can customize your leasing plan to fit your business requirements, deferred payments, seasonal payments, and no down payments.

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What vendor can I order from?

You order from the vendor of your choice! By leasing through Connect Lease Corporation, you can obtain equipment from any reputable vendor. Select your equipment and options, negotiate your best price and let us do the rest!

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What if my equipment becomes obsolete?

In the event that you need to upgrade your equipment during the lease term, we will work with you to meet your goal. Obsolescence protection is one of the valuable features of leasing that saves the owner from the risk of owning obsolete equipment. We can typically roll-over your original lease into a new lease that will fit your business needs.

What do I do if I have a problem with the equipment?

If you have problems with your equipment, you will need to contact the equipment vendor for repairs or service. The lessee receives the benefits of all buyer warranties.

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What factors are used to determine credit worthiness?

Length of time in business, financial condition, type of business, credit history, references from financial institutions and credit bureau ratings.

What effect does leasing have on the lessee’s bank line of credit?

Established bank lines are typically unaffected and can be better maintained for day-to-day working capital needs.

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What type of information will I be asked to provide for on my lease application?

It’s basic and simple. There are only seven steps to complete your application:

  1. Basic Company Information
  2. Owner Principal Information
  3. Equipment Information
  4. Equipment Location
  5. Banking Relationships
  6. Trade, Credit References
  7. Your Signature and/or Authorization

How long does it take to be approved?

Usually you’ll know in less than 24 hours! Typically requests for up to $30,000 can be approved in a couple of hours from a simple one-page credit application. The process is simple, convenient, and effective so you can get your new equipment quickly. Applications can be made over the phone, by fax, or on-line over the secure server.

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How does the process work?

Choose your new or used equipment from any national or local vendors and negotiate the price. Your Connect Lease Corporation Leasing account manager will then help you select the best lease option. You approve and sign the lease documents and then the Lessor issues the purchase order. The vendor ships the equipment to you and bills the Lessor. When you tell us that you have received the equipment and sign off on the certificate of delivery, the vendor is paid. Thirty days later you begin your lease payments.

How long do I have to be in business?

Typically, two years or more. We have many special programs available for start-ups and  new businesses.

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How long can I lease?

Most leases are written for 18, 24, 36, 48, or 66 months, depending upon the type of equipment. Leases for items that depreciate rapidly (such as computers) are usually shorter terms.

How are payments made?

Payments can be structured to meet your needs. Our typical payment schedule would include the first and last payments made at the time you sign your lease documents, with your first monthly payment due about 30 days after your acceptance of the equipment.

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How are the payments figured if there is not an interest rate?

The amounts charged on an equipment lease are calculated using monthly rental rates, rather than by using an interest rate method that is normally associated with bank loans.

A lease is not a simple interest loan, and therefore does not have an interest rate. Rental rates are based on the term of the lease, the lessee’s credit history (business and or personal), and the type of equipment being leased.

The stronger and more established your business, the lower your payment should be. Connect Lease Corporation ensures that their rates are very competitive and among the lowest available.

Obtain a free quote at no obligation and you’ll be surprised at how affordable leasing can be. Click here to request a quote

Can I cancel my lease or pay it off early?

Although you can pay your lease early without penalty, you are still responsible for the entire stream of payments. You may elect to replace the equipment with a newer model and amend your lease, but your lease contract cannot be terminated or cancelled.

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Can I still lease equipment if I have already purchased it?

Yes. This is a great advantage and financing tool for your business to put your cash flow back where you need it most… in your business. Typically, you can do a sales-leaseback for equipment purchased in the last 30 days. The sales-leaseback is a type of lease in which an asset that is owned by the lessee (you) is sold to the lessor and then leased back to the lessee.

You still have the equipment producing revenue to pay for itself and you gain working capital which can be better re-invested in the business whether it is expansion, growth, or even payroll.

Can I get a lease if my company is a start-up?

Yes. Companies that have been in business for less than two years can obtain leasing. Since the company is newer you may have a higher rate because your company is a higher risk investment than an established company. Additionally, you will be required to provide a personal guarantee.

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Why do I have to give a personal guarantee?

We make fast, accurate credit decisions based on the limited information requested on our convenient credit application. We check publicly available information and have found that credit bureaus are typically very accurate and reliable and allow us to provide you with a quick credit decision. We’ve also found that payment patterns of privately held businesses mirror that of their principals.

Why lease?

There are several advantages that make leasing an attractive option for many firms and companies. These include the fact that leasing offers fixed regular payments, provides financing for 100% of the equipment cost, allows businesses to pay for equipment as it is used to generate income, conserves both working capital and lines of bank credit and may offer certain tax advantages. The profitability of a business is in the revenue it generates not in owning of obsolete equipment.

You still have the equipment producing revenue to pay for itself and you gain working capital which can be better re-invested in the business whether it is expansion, growth, or even payroll.

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Why should I choose Connect Lease Corporation Leasing?

We believe if we can increase your bottom line and give you valued added service above and beyond what you expected then we deserve your business. You deserve nothing less than the best deal out there.

Is a down payment required?

Yes and No. Usually the first and last months lease payments are generally needed for a security deposit. (Good faith money if you will.) This differs from a down payment in that the amount is typically much smaller and it is a true deposit which can be applied to the purchase price of the equipment at lease-end or remaining payments, or returned if there are no other payments due, provided the lessee fulfills his responsibilities. Most businesses will put a 10% or 20% down payment to lower the monthly payment cost.

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