Equipment Financing and Leasing - How Do You Know Your Firm Is Getting The Best Deal?

Equipment financing and leasing is offered by a number of equipment lease companies in Canada. The only problem is knowing which company to work with, and moreover, how to ensure you receive the best rates, terms and structures available to your firm - based on your overall credit quality and the assets being financing.

Let's get right to the point - let's assume you have been approved for a lease financing, or that you have received what appears to be a competitive lease offer.

The information we share with clients focuses around how the lease company makes money - if you know that then clearly it becomes much easier to determine if you have a competitive structure - one that involves both rate, term of the lease, and conditions.

First of all, ensure you know what type of lease you are getting into - there are only two basic types in Canada, operating leases and capital leases. And we will keep it even simpler than that - if you wish to keep the equipment at end of the term of your desired lease get a capital lease, if you intend to use and return the asset negotiate an operating lease.

What Is a Finance Gap Insurance Policy?

This is a question I am asked on a daily basis. Firstly this is a very specialised gap insurance policy to cover vehicles that have been purchased using a financing arrangement. When buying any insurance policy the first thing to consider is does this policy meet all my needs adequately?

Standard gap policies generally require you to be the registered keeper or owner of the vehicle. Finance Gap Insurance is a more specific and states that you can either be the owner and registered keeper of the vehicle or the main driver for lease and contract hire purposes.

This is a very overlooked point but a very valuable one to consider as purchasing the wrong type of policy may invalidate any claim you need to make. General Return to Invoice and Vehicle Replacement Gap Insurance policies are for people who are purchasing a vehicle using cash, bank loan, traditional hire purchase or a PCP (Personal Contract Purchase). In all of the above cases you will become the owner of the vehicle and will be the registered keeper of the vehicle. All the above policies will require you to declare that you are the registered keeper of the vehicle in the small print.

How Does Premium Finance Life Insurance Work?

Premium Finance Life Insurance is not something that you hear about every day, mostly because so few people are eligible to apply for it. Those who can qualify for this type of life insurance policy funding stand to gain a great deal of money if all of the variables associated with the transaction remain in their favor. In fact as much as 15% of the face value can be seen in a return only two short years later-with no investment! With millions and millions of dollars involved in the transaction, you can calculate just how lucrative a 15% return would be.

This is how Premium Finance Life Insurance Works. You must first have an insurable net worth or asset value, called an insurable interest, of more than two million dollars. These policies have been written for up to $100 million. You apply through a premium finance broker for the life insurance policy and the financing at the same time. If the lender approves your Premium Finance Life Insurance loan, you will be given the premium money for the policy for two to five years or "life", depending on what your requirements are. Obviously the insurance policy will be quite substantial, as there are a great deal of assets being covered. Therefore the premium payments are also going to be quite significant. This is why a low interest loan to cover the cost of these premiums is so appealing. At the end of the two year period you will then have the legal option of selling this life insurance policy into a secondary market for 3% to 15% of the face value, less the paid-to-date premiums loan and interest charged by the lender, and settlement fees.