Automobile leases are referred to as fair market value (FMV) leases. They’re based on what the car will be worth on the open market at the end of the lease. When you lease a car, you are paying for the value depreciation that happens during the lease term. Leasing for packaging and industrial equipment is different but in a good way.

While industrial equipment can be leased based on FMV, it can be more difficult to determine what the fair market value of a packaging or manufacturing machine will be several years in to the future. That means that if you want to keep the machine at the end of the lease, with a FMV agreement you will end up paying more, even if you negotiate a reduced buyout price with the leasing company. A $1 buyout lease or loan is a far simpler and more powerful tool.

With a $1 buyout lease, you make your payments and at the end of the term, you pay the finance company $1 and you own the equipment. It’s simple, headache-free and gives you concrete figures for future financial planning. Occasionally we get requests for a lease with a purchase option, like 10% of the original cost. Generally though, current tax laws make loans or $1 buyout leases particularly attractive to small business owners. It all has to do with the IRS Section 179 deduction for accelerating depreciation-related benefits. Ask your accountant or talk to a leasing/finance specialist for more details.

From a financial standpoint, a loan and a $1 buyout lease are the same. So why pick one over the other?  That’s generally just your choice. Unlike a traditional bank, in many cases a finance company like mine can get a deal done with just a simple credit application and credit check. No financials needed. Plus, rates are often lower and credit criteria more flexible than many traditional banks because we specialize in financing packaging equipment. We also don’t have the massive overhead of a traditional bank. We are also more nimble, can exchange documents by email and thereby simplify and shorten the funding process.
 
How much shorter? We can process an application from start to finish in as little as a day, not weeks. We can then fund the equipment as quickly as you want. Since my company focuses on packaging and manufacturing equipment, our approach offers the rates and responsiveness you need to help your business grow. Here’s a little known fact – in addition to competing with banks, we also complement their services. By using equipment finance and leasing as a tool, that frees up lending capacity at your local bank for other capital needs. This may all translate into greater borrowing capacity and easier growth in sales and profitability.
 
For more information on how equipment financing and leasing can benefit you, call a specialist you know or call me – Larry Moller at Anthem Capital Group, Inc. I’m happy to answer your questions without you feeling any obligation. My phone number is (847) 644-8060 and my email is larry@anthemcapitalgroup.com.