Our IT Capital Finance program is designed to provide you with financial stability even as you make large—scale investments in enhancing your critical communications technologies. We understand that you need to maintain financial flexibility while undergoing a transition, which is why we offer three main leasing options. These choices allow you to pay as you go, allowing you to avoid the long—term ramifications of outright purchasing, such as equipment obsolescence or a locked—in commitment to a single technology or vendor. Our IT Capital Finance plans include options to replace your system or even change manufacturers, so you can maintain a competitive edge even in the worst of economic times. These choices give you the freedom to keep your technology fresh and your finances secure.
Three leasing options include, fair market value lease, one dollar purchase option lease, and lease change option. All three options provide the peace of mind gained from not being locked into one particular solution or vendor or being committed to a long—term and potentially quite costly arrangement. We will work with you to help you decide which lease is the best option for your organization. Our IT Capital Finance Change Program in particular provides the ultimate investment protection against changing technology and obsolescence. Change customers have the flexibility to change technology, systems, or move to a completely different manufacturer without financial penalty. There is no waiting period, no rollover balance, and no hidden costs — we literally tear up your old agreement and issue you a new one.
Advantages Of IT Capital Finance
Are you trying to buy more equipment with an even smaller budget? Financing is one option you may want to consider. Financing can help you stay within budget and get the equipment you need sooner. In fact, for many businesses, the real value of equipment can be in its’ use not in its ownership. Advantages include: speed—financing can get you the equipment you need quickly without a lot of credit documentation and hassle. In some cases, you may find a financing partner that offers “application only” requirements to get you what you need faster. Minimal up—front costs. While loans require up to 20% down payment and many times doesn’t cover costs of installation and implementation, financing typically has no up—front costs and cover 100% of total solution.
Flexibility — with a lease, your payment structure can often be designed to match the cash flow of your business. Different term lengths are also possible. Lower periodic payments. Financing often allows you to design payment structures that work for your business. Tax and accounting benefits. Some leases allow you to lower your taxable income by deducting lease payments. With others you can take advantage of accelerated depreciation under IRS Section 179. You should talk to your tax advisor to learn more about the impact financing could have to your business.
IT Capital Finance FAQs
Q. Isn’t it cheaper for me to pay cash?
A. When you purchase equipment, there is a loss in the earning power of that up—front cash payment. For example, if the net profit on working capital is 15%, then you lose 15% a year. Leasing gives you the use of your money and the use of the equipment you need so you can pay for the equipment out of earnings over time rather than put up equity capital all at once.
Q. Isn’t it better to own equipment?
A. Use of equipment, not ownership, produces profit. It is usually more economical to lease equipment and use your cash for other needs. Depending on the type of lease you choose, you can either purchase the equipment, or return it and lease more updated equipment, at the end of your lease term.
Q. What is the fair market value purchase option going to be?
A. The fair market value of the equipment will be determined by the market. If an agreement between the lessee and the lessor cannot be reached regarding market price, an independent appraisal will be used to determine the amount. A fair market value lease option offers the lowest monthly payment, payments that are tax—deductible as an operating expense, and a flexible purchase option at the end of the lease. “Fair market value” is just that—the price for which the equipment could be rented or sold in a transaction between unrelated parties.
Q. Why is it “fair market value” instead of a specific, predetermined amount?
A. The IRS has certain guidelines for a true lease, and one of the stipulations is that it must contain a fair market value purchase option. If the purchase option were guaranteed, your monthly payments would not be a fully tax—deductible expense.
Q. Who pays the taxes?
A. The lessee is responsible for all taxes, but the actual payment to the taxing authority is made by the lessor, who is reimbursed by the lessee (you).
Q. Can I put additional equipment on my existing lease?
A. Yes. Once you’ve signed one contract, additional equipment can be added easily. Please ask about our “no—doc” add—on program.
Q. Is the lease cancelable?
A. No, a lease is a non—cancelable contract.
Q. Do I need insurance?
A. Yes, you are required to carry insurance that covers fire, theft, loss, and general liability. CIFS must be shown as the loss payee and the additional insured on the policy. We can assist you in obtaining the appropriate insurance coverage.