Equipment Finance Agreement (EFA) Basics

Equipment leasing is basically a loan in which the lender buys and owns equipment and then "rents" it to a business at a flat monthly rate for a specified number of months. At the end of the lease, the business may purchase the equipment at a predetermined amount or return it.

Advantages

• Equipment leases can have lower monthly payments than standard finance contracts.
  
  
• Equipment leases can be started with very little money.  Centra has some equipment lease products that require as little as $20 to start the lease!
  
  
• If structured correctly, equipment leases can have more tax advantages than finance contracts (see your accountant).
  
  
• The leasing process is fast and can be the
   
• Leasing can also finance the soft costs often associated with equipment purchases, such as installation and training services.
   
• Leases can be structured many different ways - no payments for 90 days, semi annual payments, 10% end of lease payments, or even $1 end of lease.  You can structure a lease to have only a $1 end of lease payment.

Disadvantages

• Some people have had problems with the "end of lease option" that occurs at the end of the lease. This option is the final payment which allows you to own the equipment.  Note: it is possible to structure your lease with a $1 end of lease option (if you select this feature, your payment only rises slightly).