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Why is gap insurance considered as a financial safety belt? Simply put, it keeps you from being financially ruined when disaster hits your car. For example you are in this situation. You bought a late-model car three months ago using a car loan with a regular car insurance. The car costs $30,000 and you have already made three payments of $900 each month. Then, disaster strikes. An electric post falls and slams down on your car. The car was flattened to half its height.

Immediately, you reported it to the auto insurance company, which in turn play with numbers, mileage, depreciation, market values, and other related stuff. After a couple of days, the adjustor informs you that the worth of your car at the time of the accident is $25,000. This is the amount that the auto insurance company will provide you. But the finance company that gave you the loan will still consider the car to be worth its original price. They also play with numbers, interest rates, taxes and license fees. Then they come up with the amount of $38,000. This is the amount that you need to pay them. If the auto insurance company releases the $25,000, where will you get the remaining $7,000? Your car is already a wreck but you still owe the finance company.

You need not face such a dilemma if you have a gap insurance. With the gap insurance, you can ignore the difference between the amount covered by the regular car insurance and the amount you owed the car loan Read more…

There is little doubt that we are currently experiencing one of the most heated seller’s markets in recent history. Today’s investment sales market has been reduced to an e-bay like environment where retail brokerage houses simply put an asset up for auction and wait for the buyers to circle like hungry sharks.

Many will point to the increased flow of funds in the commercial capital markets creating a demand-side frenzy that is causing a compression in cap rates and escalating prices to all time highs as justifying current market tactics. However while there is an element of truth surrounding the logic contained in the previous sentence, I believe it is simply easier for many buyers to blame the market and follow the crowd rather than adapt their acquisitions plan. This is evidenced by the fact that many institutional buyers like REIT’s, TIC syndicators or foreign investors seem content to participate in the madness rather than seek alternate investment strategies. The need to place funds seems to be taking precedence over making good investment decisions for many in today’s market.

The real opportunities in today’s market are not found by following the herd mentality but can be found in the application of any of the following strategies:

1. “Off-market” transactions: Seek out assets that are not listed by retail brokerage firms. Hire an investment bank to approach principal owners on a direct basis negotiating with them on assets that are not publicly for sale.

2. Change Market Focus: Focus your acquisition strategies on secondary and tertiary markets where there will be less competition for assets. Additionally stay out of the hot markets and look toward markets recovering from downturns.

3. Change Asset Class Focus: Rather than chasing multifamily and retail properties look for opportunities in office, hospitality and industrial asset classes.

4. Stay Away from Traditional Trophy Assets: If you must buy big look for opportunistic plays that have higher vacancies, lease roll-over Read more…

Raising capital to start a new business may seem like a daunting task, but it need not be overwhelming if you follow a few basic business practices. If you have a viable idea that will net a return for your investors and prepare a compelling business plan the chances are good that you can find investors to join you.

Your first task is to create a business plan, sometimes known as a “business proposal” or “prospectus.” Your business plan needs to be very detailed and concise. You should include information about your educational background, experience and training in the area of business you are contemplating. Just like a resume for a job, include references and any other favorable personal qualities that you feel reinforce the reasons why an investor should trust in your ideas.

It can’t hurt to include any information you feel comfortable sharing with regard to your positive credit history. If you have records of various satisfied loans along with the payment history, that information could be helpful to prove your stability with regard to financial obligations.

If you are requesting financing for an existing business the rules are a bit different than a new business startup. The current owner should be able to provide you with profit and loss statements. If you are purchasing an online business, statistical information pertaining to traffic, number of units sold and paid advertising are definitely necessary. The purchase price of the business needs to be included along with detailed information about how you intend to service the debt as well as how the potential investor will benefit from your request.

If you are seeking investors for a new business, the information required increases. In addition to the information outlined above, you will need to include market research, projected costs and a detailed summary of how you intend to generate income. This information needs to be projected for a period of three to five years. It’s a good idea to project your expenses on the high side.

Have some idea of what you expect to pay your investor. The only reason someone is going to lend you money is if they can see decent profits in exchange for lending it to you. Your market research had best substantiate that your plan is viable and will provide them with sufficient return on investment to justify their involvement.

Before you begin your search for investors, it’s a good idea to have an attorney and/or accountant take a look at your plan. A good professional may suggest specific points that Read more…

Leasing a luxury car imposes lower costs, generally comparable to the interest rate of financing a loan. However, if you terminate a lease early or default on a monthly lease payment, you can face major financial penalties and ruin your credit rating. The decision of whether to buy or lease a vehicle also depends on your unique lifestyle. If you drive many miles each year and don?t mind paying repair bills, you probably should purchase your car. If, on the other hand, you exceed the mileage limitation or if the car shows considerable wear and tear at the end of the lease, you may find yourself paying large end-of-lease costs.

When you are thinking about getting a new car, the question always comes up: is it better to buy or lease? There is, of course, no one single answer. Each choice has benefits and disadvantages, so the choice depends on your own particular personal and financial circumstances.

A key issue is affordability. Is your job situation stable? Are you in overall good financial shape? The short-term monthly expense associated with leasing a car is much lower than the monthly payments required when purchasing a vehicle. With leasing, you pay only for the part of the vehicle?s cost used during the period of time you drive it. If you have the cash on hand, and you can pay the down payment and sales taxes ? either in cash or via a loan ? as well as the interest rate buying a car gives you that feeling of ownership and may be the best financial option.

If you want to get your hands on a luxury car, but you can?t afford the initial costs associated with buying one, leasing is your best option. Leasing a luxury car imposes lower costs, generally comparable to the interest rate of financing a loan. However, if you terminate a lease early or default on a monthly lease payment, you can face major financial penalties and ruin your credit rating. Before you decide to lease, make sure you adjust your budget for the monthly lease payment for the duration Read more…

Because most people don?t have cash to buy new cars, it is often a choice between leasing and using an auto loan. We will further analyze the benefits of each type of car finance option. The choice that you make will heavily affect your income over the next years. The first thing you should realize is that the decision of buying with cash or lease doesn?t involve just the money aspect, but the time aspect as well.

The car finance option you choose depends on the importance you give to owning a new car. If you value having the latest models on the market, then this will justify spending more money on this privilege. If your view of a car is orientated towards transportation and comfort (you want a car for practical reasons), then owning the newest model should take a few steps back on your priority list. You should think about these facts first and then consider the more tangible issues of car finance options.

The car finance deal that you are going to make starts when the salesperson asks you what kind of car finance option you want to use. Your answer can be one of the following: buy the car, lease the car or pay cash for the car.

If you want to buy the car, the dealer will ask you to fill in a credit application based on your credit scores. An auto loan will be arranged through the dealership. This car finance option usually is a 36-60 month endeavor. The longer the time the lower the payments will be. The amount of money you pay for this car finance option depends on your interest rate, down payment and total sum of loan. Also be careful, as the dealer will want you to make a large down payment. This car finance deal is based on the fact that, until you pay for the vehicle, the lending institution will own the car. The car?s ownership papers will be sent to you after all payments have been made.

There are some important aspects about car leasing that make it attractive to customers, such as: low monthly payments, low down payments and low maintenance costs. The main advantage is that a customer will get a car without giving too much money at once. The monthly payments are kept at a low level, lower than buying car with an auto loan. Another benefit of this car finance option is that the car will have a 3 year warranty and will be covered for mechanical failure during this period. As you can see by now, this looks very attractive and affordable by anyone, but there is a slight disadvantage (the same as in the case of a loan). You will have car payments until the entire sum of the car is paid. Only when you do this, the car will finally be yours.

From this point on the car finance deal will be over and if you have to begin leasing again the assumed responsibility Read more…

How would you like to have fewer hassles with your next business lease while significantly trimming costs? You can. In fact, getting better lease flexibility can easily trump getting the lowest lease rate. Here is how you can get superior lease flexibility while slashing overall leasing expense:

Lease Amount

First, make sure the lease allows you to include most of the equipment you intend to acquire. You will avoid negotiating another financing arrangement on the excluded equipment. Check that you can easily add more equipment to the lease as your needs change. The better lease arrangements provide for multiple lease schedules under a master lease or the ability to amend existing leases to make additions.

Payment Schedule

Getting a lease payment schedule that matches your company?s cash flow cycle is a big benefit in a lease arrangement. Many lessors are able to accommodate reasonable requests, subject to their own administrative constraints and their view of your company?s credit standing. Monthly and quarterly payments schedules are typical arrangements. Schedules that vary payments to accommodate cash flow seasonality are less typical, but you can negotiate such an arrangement in many cases.

Interim Rent

You can slash lease costs significantly by limiting interim rent. Interim rent is the rent you pay for daily use of equipment between the equipment acceptance and lease start dates. Interim rent can balloon lease pricing by arbitrarily extending the term of the lease (albeit by only days). The best approach is to schedule equipment delivery and acceptance toward the end of the month, to reduce the interim period. Another strategy is to negotiate a truncated period at the end of the lease such that the interim period and truncated period, together, total one monthly payment.

Upgrades

A flexible lease arrangement anticipates equipment upgrades. Usually, at the time of upgrade, the present value of rents associated with the upgrade can be combined with the present value of the remaining equipment rents to create a revised schedule.

Early Termination

Most leases do not provide for early termination. One way to achieve more flexibility is to have such a feature built into the lease. An amount consisting of the present value of the remaining rents plus a termination charge no greater than 3% to 5% should compensate the lessor for an early termination in most leasing arrangements.

End of Lease Options

Does the lease you are considering have flexible end-of-lease options? Here are several options that will make your lease more user-friendly: the right to return the equipment to the lessor without undue penalty or expense; the right to purchase the equipment at a fair or reduced price; and the right to continue leasing the equipment at a fair or reduced rent. Use of upper limits in fair market value purchase or rental options can greatly reduce potential costs at lease end. Beware, however. Lessors may insist on fair market value floors when they agree to upper limits.

Equipment Relocation

It may become necessary to relocate the equipment to another site during the lease term. Make sure the lease provides that equipment may be relocated without unreasonable penalties or charges, subject to notifying the lessor. Keep in mind that equipment relocation may Read more…

You have made the decision to lease some needed equipment for your business. With several thousand leasing companies in the U.S., how do you find the one that is best for your firm?

The reality is that leasing companies differ in a number of important ways. Some leasing companies generalize while many specialize. The ones that specialize concentrate on specific industries, lease types, certain equipment types, or in transaction sizes.

For example, some leasing companies specialize only in a single industry like health care, printing, agriculture, or transportation. By doing so, they are able to structure lease transactions tailored to the special needs of participants in a given industry.

Others lessors focus exclusively on a lease type. They may only offer operating leases for equipment, offering their lessees relatively attractive monthly payment amounts in return for the lessor retaining ownership of the equipment at lease end. The hope of these lessors is that the equipment will yield attractive residual values, thereby resulting in higher transaction yields.

Some lessors specialize in full-payout finance leases. These leases are similar to installment loans in that the lessee usually gets to keep the equipment at lease end by paying a nominal purchase amount. Additionally, the lessee can calculate the transaction rate in a way similar to that of a loan.

Still other lessors focus on lease size. Small ticket leasing companies specialize in transactions less than $100,000. By keeping the lease amount relatively small, lessors are able to granulate their lease portfolios. They believe that a granulated portfolio helps to reduce overall credit risk. For small ticket leases, lessors employ credit scoring systems to assist in making credit decisions. One of the requirements of lessors specializing in small ticket leases is that company principals guarantee the lease.

Leasing companies differ in resources and capabilities. Many large leasing companies are owned by banks, financial companies, or other large industrial concerns. These firms usually have abundant resources and expertise in a number of equipment leasing specialties.

Mid-size and smaller leasing companies greatly outnumber large lessors. While these companies cannot match the resources of their larger brethren, Read more…

If the equipment leasing company that your firm uses could make money for you or save you a bundle, wouldn?t that company be worth its weight in gold? Sure it would. That firm would probably earn the loyalty of your firm.

Some leasing companies go the extra mile, delivering exceptional value to their customers. Here are a few ways stand-out lessors deliver great value:

Cost-effective Leases

Certainly, providing a competitive lease transaction that helps your firm to stay within budget and spread the leasing cost over the equipment?s useful life is a winning combination. The lease should also be flexible and user friendly. It should allow your firm to upgrade equipment easily and to terminate the lease in a cost-effective manner, should the need arise.

Convert Existing Equipment To Cash

If your firm has recent-model equipment that was not financed, why not convert the equipment into cash that can be used in your business? A skilled lessor can help your firm achieve that goal by structuring a sale-leaseback transaction. Under an equipment sale-leaseback, your firm sells equipment to the leasing company at the equipment?s fair market value. The leasing company then leases the equipment back to your firm under competitive terms. This type of transaction can be a win-win for both parties.

Achieve Higher Values On Unneeded Equipment

Your firm may have equipment that still has value, yet that equipment no longer meets your company?s needs. Certainly, you can place ads in industry publications or otherwise attempt to re-market the equipment. Lessors that stand out can often help you re-market used equipment while achieving higher equipment values. Some lessors are active in the after-market of many types of equipment. They are often able to orchestrate the removal, refurbishment and sale of used equipment, while maximizing the re-market value.

Promote Your Business

A stand-out leasing company can help your firm excel by promoting your business. Some promotional activities offered by savvy lessors include: issuing joint press releases about the lease transaction, highlighting your firm?s offerings; including a testimonial from your firm on their website with a description of your company?s activities; highlighting your business in their company newsletter sent to customers; introducing your firm to other leasing customers who might need your products or services; and hosting customer mixers to allow you to network with other customers.

Introductions To Key Financing Sources And Financial Service Providers

Leasing companies typically Read more…

Are you considering leasing equipment for your firm, but you are running out of time? Here are a few tips to make sure your company?s lease gets approved quickly:

Guard Your Company?s Credit Standing

Establish a pattern of paying invoices and bills on time. As with personal credit, a history of prompt payment is one of the most important criteria in extending lease financing. If your company has a dispute with a vendor or credit provider, try to resolve it quickly. Be prepared to discuss the status and reasons for the dispute in detail with the leasing company. Because many leasing transactions require personal guarantees of the principals, it is important that the principals also maintain good credit standing.

Prepare A Lease Package

Include information in the lease package that the leasing company might require. You should include a background write-up discussing your company. Discuss your company?s history, the business background of the principals and a detailed discussion of what your company does. Also include a discussion of the competition and your company?s accomplishments. Include company financial statements and tax returns, if available. Include a list of credit and trade references. Also include a list of the equipment you intend to lease along with some equipment literature. Finally, include a summary of the lease terms you are seeking.

Identify Credit Enhancements Ahead Of Time

Although you might not need credit enhancements for your lease, it will not hurt to identify them in case they are needed. Possible credit enhancements include: additional equipment collateral; cash equivalent collateral such as CDs, stocks, bonds and cash; other assets such as real estate, revenue contracts, intellectual property rights; personal guarantees.

Have Updated Financial Statements

Although financial statements may not be needed for transactions under $75,000, they are often required for larger transactions. Where possible, these statements should be prepared by a C.P.A. and audited. Most lessors want to see financials covering at least three years of operations and the most recent interim financial statements.

Have an updated business plan with projections. Show a forecast of revenues, expenses and earnings. Include the lease payments as an expense item under the assumption that the lease is approved. Include the key business assumptions used for the plan. Offer a summary of the projections, comparing them to historical performance.

Get Bids From At Least Three Leasing Companies

If you want a competitive lease transaction, it makes sense to get lease quotes from several reliable leasing companies. Look for leasing companies that specialize in the type of lease transaction that you are seeking. There are lessors that specialize in lease transactions under $ 75,000 for instance. Others specialize in certain Read more…

As a decision-maker in the construction industry, weighing all equipment acquisition options is a critical aspect of the job – especially given today’s fluid marketplace.

With construction equipment leasing you don’t have to worry about the overhead of the purchase while keeping your cash accessible. No matter how big or small your project you can always find leasing options from the financial institutions who specialise in this type of product. Plus, payments you make under an operating lease are tax deductible.

65% of the top businesses lease equipment, according to an ELA survey. The top reasons these businesses cite for leasing include consistent expenses in budget management, increased cash flow, and the ability to have the latest equipment.

As businesses prepare to compete and grow in a new millennium, many are searching for proven new ways to address their equipment financing needs. And the choice for an increasing number in construction is clear: equipment leasing.

If structured properly, as a “true” lease, construction equipment leasing has some very important tax benefits. The payments can be considered a rental resulting in a 100% expense write-off. At the end of the year you would simply total your payments and deduct them entirely as an expense. This is a much more rapid write-off than interest expense and depreciation.

Most leases do not have to be shown on your financial statement as a liability, since theoretically it is a contingent liability, and only has to be shown as a footnote. This keeps your financial statement from becoming overloaded with debt and is important if your bank lines require maintaining certain ratios.

The biggest benefit, however, is that you can get the most money with Read more…