Evaluating equipment finance providers
There are three main types of equipment finance providers you can turn to: brokers, captive leasing companies, or independent lessors.
Broker - Much like an insurance broker, an equipment leasing broker acts as an intermediary. The broker will take your lease requests to the banks and financial services companies most likely to agree to finance your asset.
Captive leasing company - As a subsidiary leasing arm of a manufacturer or dealer, a captive leasing company's main purpose is to provide leasing to its parent company and/or dealer networks. Typically you'll only encounter them when you're obtaining a lease directly from a dealer.
Independent lessor - Independent lessors are funding sources that lease directly to businesses. These can include banks, equipment lease specialists, and more diversified financial companies.
Often, the type of equipment finance provider you should turn to will depend on your situation. If you have a financial services provider that knows you and is familiar with your business, you may want to start with them. A manufacturer's captive leasing company is worth investigating if you've already decided exactly what equipment you're going to buy. And in general, if you're not that familiar with leasing or with the product you need to lease, brokers are the best at providing multiple options and helping you get the equipment finance you need.
Choosing the right equipment finance provider
It's important that you evaluate prospective lessors just as carefully as they're evaluating you. One way to approach the decision is too look for a lessor who will act like a partner. Instead of treating you like a faceless account, they should take the time to answer your questions and help you through rough spots, instead of repossessing your equipment or bumping up your rates the first time you're late with a payment.
You should also look for a leasing provider with the right experience. Some lessors specialize in specific industries or types of loan: doing a little research can quickly tell you if your potential lease providers have the expertise you require.
A standard approach to evaluating any business purchase decision is to check references, and this applies to leases, as well. Have prospective equipment finance companies give you contact information for four or five references, preferably businesses similar to your in size and industry.
When you speak to them, as questions such as these:
- Did the lessor treat you fairly?
- Did you get the right lease for your needs?
- Did the lessor provide help on your application and paperwork?
- Have you had any trouble making lease payments? How did the lessor react?
- Would you work with this equipment finance company again?