Equipment Leasing

Often a new start-up construction business owner discovers that he/she cannot qualify for lease-financing for the Heavy Equipment needed for their new business.

The new business owner needs a vital piece of equipment such as truck, a trailer, a backhoe, a grader, an excavator, etc., etc, but discovers that they cannot qualify for the financing.

Even though the new business owner has jobs lined up or contracts in place that will generate revenue to make the payments, that new business owner gets denied financing.

This dilemma is not necessarily limited to the start-up business owner either. Established construction businesses are discovering that their bank or finance company is declining to make that all important loan. The reason? The recent impact of the residential sub-prime loan comparison has migrated to the business community. Banks are tightening up on the micro-loans that they used to make with regularity.

So, what is the new or even the established construction business and trucking business owners do to get critically needed heavy equipment lease-financing?

A solution: Check out off-lease equipment that Lease-financing Companies have in their inventory. There are literally hundreds of pieces of quality used pieces of heavy equipment in off-lease status that are owned by heavy equipment leasing companies. This is quality equipment that was returned to the lessor at end of term or for default.

Why is this good for the start-up construction/trucking company? The lease-financing companies do not want this equipment on the books. Every piece of equipment that remains in an off-lease status is costing them money. As such, they offer much better terms to a buyer.

Depending on the type and age of the equipment, the lessor may offer warranty programs for the equipment as well.

While these are all significant benefits for the start up construction/trucking company, the equipment will often be located in a city remote to the business owner. This will require the owner to travel to the location to see the equipment. If purchased, the owner will have to arrange for transportation of the equipment. Some lessors will arrange shipping and fold the cost of shipping into the lease-financing as a soft cost.

In summary, start-up construction and trucking company’s do have an alternative when they do not qualify for conventional lease-financing or their bank had to say no to their heavy equipment financing request

Year-end results have been announced for seven of the eight biggest UK banks, and it seems that the banking industry is not in such bad shape after all.

The biggest casualty of all, of course, was Northern Rock, nationalised as it crumpled under the pressure of lack of cashflow. A clear victim of the sub-prime crisis which originated in the US, Northern Rock was unable to sustain its business model and had to resort to a loans lender of last resort, the Bank of England before the Government decided that temporary nationalisation was the best option for the time being.

Other UK banks revealed that they thought to be their losses from write-downs related to sub-prime funds, but none of them seemed to be as badly hit as US banks like Citigroup. It lost £12.1bn and UBS lost over £9bn.

The UK results have been nowhere near as bad. The total of losses and write-downs is so far just over £5bn, mostly down to Barclays and Royal bank of Scotland. Others, such as Lloyds TSB, Standard Chartered and HBOS appear to have got off lightly, losing only a few hundred million pounds.

Nevertheless there are still fears that other personal loans write-downs may not yet have come to light, and no bank chief executives are prepared to announce that the credit crunch has ended, or forecast when it will end.

This week’s announcement by RBS as described by Carla Antunes de Silva, analyst at JP Morgan, as 'the messiest set of figures we have seen', saying that RBS’s write-downs were inadequate. She identified exposures totalling over £29bn covering all things from collateralised debt obligations to monoline exposures.

It is apparent that, although UK banks seem to have fared well – some even riding out storm with increased dividends – the credit crunch still has some way left to run.

A recent report has shown that consumers have very little choice when it comes to finding a long term fixed rate mortgage for twenty five years, with only seven out of ninety lenders offering a fixed rate deal for such a long term.

Despite calls from Chancellor of the Exchequer, Alistair Darling, for lenders to offer greater access to affordable longer term fixed rate deals – an issue he will be addressing in his up and coming first budget – many lenders are still not offering this, with many stating that consumers are never keen to take up a fixed rate for such a long period.

Fixed rate mortgages have been very popular in the past, but most consumers feel more comfortable taking them over two, three, or five years.

One industry official stated: "Certainty about monthly remortgage payments may be a good thing but borrowers should think very carefully before committing to 25-year fixed rates. The risks are clear. Not only could borrowers end up locked at a higher rate when interest rates are falling but could also find themselves having to pay redemption penalties if they want to move house."

He added: "It is virtually certain that people’s circumstances will change several times over a 25-year period."

Car Leasing
Leasing cars means that you are going to pay the amount the cars depreciate during the time you are in control of them. When you are leasing cars, you do not own them, and when you turn them back in, you will have, in theory, paid for the value that you used. The difference between the value of the vehicles when they were new and the value at the end of the car-leasing contract is called depreciation, and depreciation determines how much leasing cars will cost you.

What is unique about leasing cars is that different cars have different rates of depreciation, which means they are have different leasing costs. American cars, for instance, tend to have a higher rate of depreciation than cars of European and Japanese makes. This means that if you are going to lease a car, you might want to look for a foreign-made model if you want to save some money.

If you are considering leasing cars, whether it is for your business or for your personal use, you will generally be able to drive a much newer car for a much lower monthly cost. This is a great option if owning the vehicle at the end of the process is not important for you. Leasing cars is a great option as well for those people who want to have newer, more reliable vehicles at all times. When the lease is up, you simply turn the car back in and shop around for a new car to lease! That is the beauty of car leasing!

Advantages of Leasing Cars
Leasing cars for my business offered me the tax advantage of not paying the hundreds of dollars in taxes a purchase would require. What's more, I can deduct a portion of the lease installments as a business expense. Plus, The monthly payments are 30-50% less than a loan for the same fleet.

Most lease agreements coincide with the manufacturer warranty so I don't have to worry about costly mechanical repairs because nearly everything is covered. Another advantage of leasing cards is that I can return a vehicle after using it for a few years and pick up a newer model. I won't lose equity in the vehicle and I'll never owe more than it's worth thanks to the included gap insurance.

Disadvantages of Leasing Cars
The main disadvantage of leasing cars for my business is the mileage limit. If I exceed the allowed mileage during my lease period I'll be penalized up to $.39 per mile. I will also be charged for any damage or changes made to the leased vehicles.