1. Non-Cancellable Agreement
When entering into a lease contract, the business owner agrees to make all the lease payments to the end of the term. While there is no penalty for early payoff, the full payments are normally required to pay off the lease early.
2. Document Fees
These fees are administrative costs due upon signing the lease and range from $50 to as much as $350 or more, depending upon the complexity of the lease contract and size of the transaction.
3. UCC-1 Fees
These are fees required by the Secretary of the State where the equipment is being leased. The fee is usually is a one-time percentage that is due upon signing the lease documents.
4. Taxes
In most states, there is a tax on goods purchased. Some states tax at 5 or 6%, or more. The tax is factored into the lease payments, so be prepared to calculate this cost, as it could increase your monthly lease payments $20 or more per month depending upon the total cost of the equipment, and the state of purchase.
5. Insurance
A section in the lease documentation will require that the equipment be covered by insurance. Here the leasing company is protecting their interests. They want to make sure they will be fully compensated for the equipment in the event of fire, theft, flood, etc. Most business owners will already have adequate insurance on their building to cover such equipment (if it is contained and used inside). However other companies using more portable equipment (such as lift trucks, golf carts, hydraulic lifts, bulldozers, etc.) may need to take out additional insurance to assure adequate coverage.
The bottom line is that when you are deciding to lease equipment, be certain you are aware of all costs involved with the transaction. Then balance them against the benefits to choose the appropriate choice for you and your business.
For more information see the Canyon Leasing Home Page
Tags: Canyon Leasing, Costs of leasing
