Equipment Financing And Leasing In Canada : Considered This When You Finance Assets ?
by
stanprokop
Depending on the type of leases that Canadian business owners and financial managers have entered into is critical to have the information and skills to negotiate a successful end of lease strategy. The bottom line is very simple you are at the end of your Canadian Equipment Lease financing what now? What happens to this equipment and what are my rights and obligations…
The entire process should be viewed as a proactive process with your equipment financing lender. Some Canadian business owners may also choose to use the services of an experience, credible and successful lease financing intermediary to assist them with the process.
We have heard the expression timing is everything . Thats equally important in our scenario, as it is critical to start to evolve into discussions with your lessor at least a couple of months ( 90 days is recommended ) regarding final disposition and acquisition of the asset . Some equipment leases in certain areas of business may be in the many hundreds of thousands or millions of dollars given these transactions are much more d complex we would recommend an even longer time period for start of negotiations.
So what are the Canadian lessees rights and obligations? Thats a simple answer they are in the written lease contract your firm entered into with the lessor. That wording should be reviewed by you with respect to issues such as
Can the lessor come to your premises to inspect the equipment?
Does your firm have to provide maintenance records?
What was the return or purchase provisions as documented in the lease transaction you signed?
We would also add that many equipment leases require you, the business owner, to notify the lessor of your intentions under the lease, and in some cases the lessor may also be bound to notify yourself as to final termination issues and procedures. The rights and obligations you have under the lease are neatly compacted into the following points You can buy, return, renew or extend the lease, or surrender the asset.
By now business owners realize that the lease they entered into three or five years ago must clearly be reviewed again. Companies that do a lot of lease equipment financing are strongly recommended to have follow up and termination policies in place that will allow the lease to be reviewed as it comes to expiration.
Lets talk a bit about the value of the equipment, – This is somewhat of a tricky area and business owners are cautioned to investigate this one thoroughly. We can frankly compare our scenario to selling our homes we think us as homeowners know what the price is worth, the realtor tells us their opinion, and, guess what, the market will ultimately decide what the home is worth.
Its not unlike your lease financing transaction, whether that financing was for computers, or plant machinery. Certain assets depreciate and lose value s very fast, some lose a portion of their value, and in a very small set of circumstances some assets hold their value and may in certain instances be worth more than you paid for. (Rare, but it happens!)
In summary, business owners are cautioned to ensure they understand the end of lease options rights and obligations. Follow up to the transaction should not be done at the last minute, and thorough investigation of asset value should be done with proper diligence. Its only common sense. Seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can assist you with your lease finance challenges.
Stan Prokop – 7 Park Avenue Financial : http://www.7parkavenuefinancial.comBusiness financing for Canadian Firms , specializing in working capital, cash flow, asset based financing , Equipment Leasing , franchise finance and Cdn. Tax Credit Finance . Founded 2004 – Completed in excess of 90 Million $ of financing for Canadian corporations . Info /Contact : http://www.7parkavenuefinancial.com/equipment-financing-leasing-finance-assets.html
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