Lease vs Loan

 

 

Here are some things to consider when comparing a lease to a loan.

 

 


Rates

Loan

Rates are typically based on Prime Rate or LIBOR and as the index fluctuates so does the monthly payment. This may be beneficial when rates are dropping but is detrimental when interest rates rise or are erratic, and makes budgeting more difficult.

VS

Lease

In a lease, rates are generally fixed for the term of the lease. Fixed rates and payments make budgeting and cash flow management much easier.


Amount Financed

Loan

Banks will usually require a down payment and will only finance a portion (60%-80%) of the equipment cost, not including any of the soft costs such as installation, service, or training costs.

VS

Lease

With a lease you can finance 100% of the equipment costs including all of the soft costs. There are minimal out of pocket costs and these are usually limited to a one month lease payment or a small security deposit.


Terms

Loan

Bank loan terms are less flexible than leasing terms.

VS

Lease

With a lease you choose the terms. Custom terms such as Seasonal, Deferred, or Step payments can be arranged. Leases can also be structured contracts to meet any Capital or Operating Budget restrictions.


Equipment Types

Loan

Banks may not finance equipment that they do not understand or they feel has limited collateral value. Cloud based service fees, software, training and implementation are often excluded.

VS

Lease

With a lease you can finance nearly any equipment types, including leasehold improvements, software, and any soft costs.


Speed and Flexibility

Loan

Banks can be slow decision makers. It can take weeks to prepare your request and bring it to the credit committee for review.

VS

Lease

Our goal is to provided credit approvals on the same day or within three business days.


Collateral

Loan

Banks usually secure their loans by requiring additional collateral. Banks may even place a blanket lien against all current and future assets of your company.

VS

Lease

Usually the only collateral required for a lease is the equipment being leased.


Restrictive Covenants

Loan

If a borrower fails to maintain bank defined financial ratios the bank can increase the rates, charge fees or even call the loan. They can also place restrictions on future borrowings from any institution.

VS

Lease

In most cases a lease has no such restrictive covenants.


How can you free up
capital & drive growth?

Contact us

 

 

 

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Why Lease?
Advantages of Leasing

Stay on the cutting edge by leveraging the latest technology—while freeing up capital to build your business.

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What we Lease

We will finance your hardware, software, implementation costs, forklifts, CNC machines, new HVAC—or any leasing need—all under one comprehensive master lease agreement

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Our Relationships = Our Greatest Assets

Trimarc Financial, Inc. is focused on building financial solutions designed for your business, while developing long-term relationships based on honesty, integrity, and trust.

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