Guide to equipment leasing for your business

Crystal Watts By Crystal Watts, 11th Jan 2011 | Follow this author | RSS Feed | Short URL
Posted in Wikinut>Business>Supply Chains, Procurement & Logistics

The option to lease equipment has grown popular among the business community.

Lease Options

Lease options can provide businesses access to equipment services according to a lease agreement. Terms of the agreement are defined in the contract. The contract specifies the terms of usage, payments, and duration of the contract.

Terms of a Lease

There are many types of lease agreements and regardless of type; a lease is a contract enforceable by law. Terms of a lease define the parties involved such as the names of the party leasing (lessee or licensee) and the (lessor or licensor) owner of the property. Rights and responsibilities of the lessee and lessor are defined within the contract. Lease agreements are extended for, but not limited to, property, cars, furniture, office equipment, computers, software licenses, electronics, production and industrial equipment, and more. There is a wide variety of equipment that can be leased.

Length of Lease

Lease contracts can span anywhere from several months to several years, majority typically range from 3 to 60 months. At the end of the lease, dependent upon the terms of the contract, a lessee can end the contract by lease renewal, equipment return, equipment purchase at an agreed upon set price.


The benefits of leasing equipment include no upfront expenses. Leasing agreements typically require a down payment to acquire the lease. This down payment versus upfront costs helps business owners retain more of their capital for other expenses or use within the business. In addition, some businesses use equipment leasing as a way to avoid using out-of-date equipment. If defined in the contract, the business owner can upgrade at the time of renewal of the lease. Additionally, according to IRS publication 946, there may be some tax benefit for leased property.

Leasing Providers

There are several types of leasing providers such as brokers that act on behalf of the (lessee) company. The lease request is submitted through to the broker and the broker negotiates the approval process and terms of the agreement. Dealers or subsidiary companies act on behalf of the dealer or manufacturers; leasing is provided on behalf of the parent company or (lessor). Independent lessors, are businesses that lease their equipment services directly to (lessee) businesses.

Finding the Right Provider

Choosing to accept a lease agreement is a mutual exchange. The best contractual business relationship is one that fits the needs of both parties. Research the business and learn about its background, experience, previous and existing clientele, and their experiences. Find out what others have to say, good or bad. Go to the Federal Trade Commission website to find out if there have been any complaints reported. Complaint information can also be located on the Better Business Bureaus website.

Closing the Deal

Before signing the contract, looking around and compare prices, request quotes from several different providers to ensure you are getting the best price possible. Find out the credit requirements for the application. Lease applications are similar to credit applications. Each lessor is a business and there are variables that must be met to qualify for the lease.


Business, Equipment, Federal Trade Commission, Industrial Equipment, Lease, Leasing, Office Equipment, Rentals, Vehicle Lease

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author avatar Crystal Watts
Crystal Watts is a Freelance Writer and Owner of

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author avatar Retired
12th Jan 2011 (#)

This is a really great article.

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author avatar Denise O
12th Jan 2011 (#)

Good info. I am sure it does help a lot businessed to go this route.
Thank you for sharing.:)

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author avatar Denise O
12th Jan 2011 (#)


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author avatar Greenfaol
12th Jan 2011 (#)

Excellent article, really useful, especially the section on finding the right service provider, the links you have are extremely useful. Thanks for sharing :D

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author avatar SingersAF
20th Apr 2011 (#)

Fantastic article!

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