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SELECTING THE RIGHT
LEASING COMPANY

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Leasing companies vary by (1) experience, (2) industries they service, (3) products and services, and (4) the flexibility and completeness of their administrative process. Selecting the right leasing company for you can be a very individualistic decision. However, there are some general factors you might consider when selecting any leasing company.

Whether you are a vendor, interested in offering leasing to your customers, or an end user directly interested in leasing software or equipment, many of the factors will be the same. Vendors and their sales persons, however, may have additional concerns that should be met. Those vendor specific concerns are highlighted last.

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EXPERIENCE FACTORS
  • Years in Business. Experience is no guarantee that any leasing company can provide the benefits you are looking for from a leasing arrangement, but the number of years in business is a gross predictor that the leasing company can perform.
  • Experience in Your Industry. Another key factor to consider is does the leasing company have experience in your industry. For example, LPI Software Funding Group specializes in the software industry. We are familiar enough with leasing in general that if a customer needed to lease heavy construction equipment, we could do that. However, we do not know much about that type of asset. A leasing company with experience in leasing heavy construction equipment might offer better lease terms, better pricing, or flexible lease structures because they understand the value of the equipment and its value to the customer and the market.
  • Reputation As in any other business, it is critical to have a leasing company with a great reputation as shown by references of its customers.

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PRODUCTS AND SERVICES

In general, leasing companies offer various types of products as defined by the types of leases they offer as well as services they deliver. Consider the following product and service related issues when selecting a leasing company:

  • Do they offer either a finance lease or an operating lease?
  • Will they lease the type of equipment or software that I want?
  • Can I vary the lease payment over the term of the lease or must the payment remain level over the term?
  • Will they offer a balloon payment lease if I need to reduce the monthly lease payment?
  • Will they offer coterminous leases so that a number of leases end at the same time?
  • Will they offer rent holidays if I need short periods of time without making any payment?
  • Will they give me a preapproved lease line so I can get additional software or equipment without another credit check?
  • Will they handle any problems that come up with the vendor?
  • Will they disclose how they do their pricing?
  • Will they give me a written proposal?
  • Are there any conditions on their proposal?
  • Are they familiar with the credit issues relating to large and small companies?
  • Will they only look more at my financial statements?
  • Will they talk to the CFO or other financial people to understand any special financial issues?

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ADMINISTRATIVE PROCESS

In order to complete any lease transactions, there are generally a number of steps that must be undertaken. In selecting the right leasing company, it is important to understand the complete administrative process and ensure that the process, while necessary, is not unduly burdensome to either the user or a vendor. Specific questions you might consider are:

  • Is the credit process quick?
  • Is the lease agreement fair?
  • Is the lease agreement understandable?
  • Does the lease agreement disclose all charges?
  • Is the leasing company flexible?
  • Is the leasing company creative?
  • Is the leasing company willing to make reasonable accommodations in its lease or credit process to meet my company's special requirements?
  • Will the leasing company invoice in the manner I need?

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VENDOR SPECIFIC CONCERNS

For vendors considering offering leasing through a leasing company, you need to think about how you want the leasing company to work.

  • Will the leasing company accommodate you or your sales people's needs?
  • Will the leasing company work directly with your sales people?
  • Will they work with resellers?
  • Do they provide telephone support?
  • Do they have an e-mail system?
  • Do they provide Internet support?
  • Do they provide any type of training?
  • Do they provide reports on leasing activity?

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All these factors are important to consider in evaluating whether a leasing company will provide sufficient levels of services to your customers and your sales people so that the leasing program provides you with the types of benefits you anticipated.

© LPI Software Funding Group, Inc.  

593 Cricket Lane, Suite 200     Wayne, PA 19087  

610.687.4434      610.341.6100   sales@lpilease.com
                         February 27, 2006