Equipment Leasing Trends this 2015

 Headquartered in Grand Island, Nebraska, Axis Capital Group has grown to become an industry leader serving equipment vendors nationwide. Halfway through 2015, we have already experienced a lot. As forecasted by the Equipment and Finance Association (ELFA), businesses, nonprofit organizations and government agencies have spent a great deal of money in capital goods and fixed business investment (including software) this year, financing a majority of those assets. Businesses  is still to find opportunities presented by a steadily improving economy and favorable credit conditions as they make their decisions for equipment replacement and expansion.

Let us recap and review all these forecast and see for ourselves if we have already achieved it.

1.            Investment in equipment and software will reach an all-time high in 2015. As the different economy continues to improve, business investment is forecast to reach a record $1.484 trillion in 2015. As business investment grows, demand for equipment financing will increase. In developing cities such as Singapore and Jakarta, Indonesia, results are now being shown but much is still being expected.

2.            Businesses will invest in equipment not just to replace aging assets, but also to aid in expansion. The pent-up replacement complaints and demand that has driven equipment investment in previous years may be supplemented by long-awaited expansion investment as capacity utilization rates in some industries reach or surpass levels historically known to spur business investment. Industries poised for investment growth include oil and gas extraction and transportation equipment manufacturing.

3.            Improving market conditions will continue to increase credit supply and demand for equipment acquisitions. As the economy steadily improves and business confidence continues to increase, credit standards should modestly loosen. The rate at which businesses finance their capital spending has grown consistently and will continue to increase in 2015 with steady economic recovery and shifts in Federal Reserve policy.

4.            Eyes will be on short-term interest rate increases. Expectations for the Federal Reserve to raise short-term interest rates in 2015 should spur equipment investment as businesses seek to lock in equipment financing at lower rates. Despite rate increases, businesses will find that a highly competitive “buyer’s market” will continue to make financing an attractive option for acquiring equipment.

5.              Advances in the use of technology drives and will drive innovative financing options. Equipment finance providers are streamlining their business processes and improving customer self-service capabilities using digital technologies. At the same time, some end-users are moving away from traditional equipment consumption models and toward hosted or managed services based on usage rather than total ownership. To meet customer demand and address evolving technology equipment requirements, equipment finance companies will tailor innovative financial offerings.

Axis Capital Group Review: What Every New Business Owners Should Know

Startups and new businesses may already realize the many benefits of leasing their equipment, including conserving their cash and significant tax benefits.  Before signing any contract, renting or buying any equipment for your business, you should consider the following tips to make sure you don’t make any costly mistakes.

·Understand your business credit and organize your financial information before contacting an equipment lease financing provider.

·Don’t assume your bank or the equipment manufacturer’s captive finance company will offer the best terms. The majority of equipment leases are done by equipment lease providers. Always compare rates, lease terms, fees and options.

· Once you have your top pick, make a diligent search on them. Go online and search them on. A legitimate business should be able to put all their services comprehensively online with related articles and contents to support their legitimacy. You can immediately pinpoint a scam when they have unclear and incomplete contents or no websites at all. Review their testimonials. You might find good or bad things about them.

·Don’t pay upfront “application” fees to an equipment financing provider.

·Be prepared to explain in advance any negative business results to a lease financing provider. You shouldn’t hide any losses in front of them.

·Cities like Jakarta, Indonesia, Singapore and Tokyo, Japan has laws almost the same with the US in lending. Check if you can get any bonuses or discounts.

·Understand the difference between a Fair Market Value Lease and a $1 Purchase Option Lease. A Fair Market Value (FMV) Lease is one of the most common leases that businesses select because it offers the lowest monthly payments, provides the greatest flexibility at the end of the lease, and may also provide tax incentives. A FMV lease is often used for acquiring technology equipment. On the other hand, a $1 Purchase Option Lease gives businesses the ability to “purchase” equipment for a $1 at the end of a leasing period. The monthly payments are higher than a FMV lease. In addition, you may also have additional financial benefits including depreciation and interest expense benefits for tax purposes.

·Describe to the equipment lease financing provider how the equipment acquisition will benefit your business. Provide a projection of cost savings or incremental realizable margins.

·Consider bundling multiple equipment acquisitions from different vendors under one lease with an independent commercial equipment lessor. Rates tend to be higher for smaller transactions. Bundling equipment acquisitions generally results in lower rates, and also minimizes processing fees.

·Ask your equipment vendor for payment terms so you can defer a portion of the equipment cost, and coordinate deposits, progress payments, and performance retention payments.