Leasing Options

Frequently Asked Questions

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Monarch Computer Systems, Inc.
Financing by GE Capital


Advantages of Leasing

Leasing is a flexible form of financing.

Avoids Risks of Ownership:
It is use, not ownership, of equipment that provides benefits. Certain financing programs allow you to reap the benefits of the latest equipment without taking the risks associated with ownership such as obsolescence and debt burdens. With GE Capital you can upgrade their equipment, taking advantage of unforeseen technological advancements as they occur. GE Capital can offer you the convenience of short term use, with planned equipment replacement. The ability to defer the ownership decision until late in the term, allowing you to re-evaluate the equipment and exercise options of ownership or return.

Low Monthly Payments:
Leasing low monthly payments allow you to overcome budget constraints you may face. Fixed monthly payment amounts also improve your budgeting and forecasting capabilities thereby improving your control over cash flow.

Complete Financing:
Unlike banks that will finance only the equipment cost, leasing allows you to include additional costs such as software, training, installation, maintenance and/or upfront sales and use taxes.

Little or No Up-Front Cash Commitment:
GE Capital leasing allows you the flexibility to obtain equipment without a large up-front cash commitment.

Flexible Payment Schedule:
GE Capital leasing programs can be structured to fit a wide variety of needs including growing businesses that desire a graduated payment structure or seasonal businesses with irregular cash flows.

Conserves Capital:
By requiring little or no cash up-front, cash is available to be invested, used for other needs or saved for emergencies. GE Capital also helps you conserve capital by not requiring compensating balances.

Provides Additional Source of Capital:
Leasing does not replace or restrict your ability to utilize cash or bank loans for other purchases. Leasing adds a source of capital, with products tailored to maximize flexibility and help you stay on the cutting edge of technology.

Hedge Against Inflation:
Financing allows you to purchase new equipment today and repay with tomorrow's less valuable dollars. In other words, their payments remained fixed despite inflation.

Tax and Accounting Benefits:
Certain leasing programs allow you to keep the asset off your balance sheet (that is, treat the equipment as a tax deductible operating expense rather than a capital expenditure). Unlike obtaining equipment with an outright purchase, off balance sheet financing does not increase the company's debt/equity ratio which can decrease your borrowing capacity.

Other leasing programs require capitalizing the equipment on the company's balance sheet. In these cases, you receive tax benefits of ownership such as interest and depreciation deductions. Your tax advisor can best consult you on the leasing option that is most beneficial to your needs.

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Leasing Options Available

Lease Products
Because no two businesses have the same equipment needs or financial requirements, we offer a variety of lease financing options.

$1 Purchase Option Lease
For businesses looking for new technology and equipment ownership, we offer a $1 Purchase Option Lease. This is a loan-based product with a $1 purchase option at the end of the lease term. Since this is a capital lease, your company may qualify for interest and depreciation deductions for tax purposes. The term of the lease is usually three to five years. We can work with you on other terms that may better fit your needs.

10% Purchase Option Lease
For customers wanting the features and benefits of a $1 Purchase Option Lease but are looking for a lower monthly payment, the 10% Purchase Option Lease is the ideal product. The 10% Purchase Option Lease is also a loan-based product with a fixed purchase option at the end of the term of 10 percent of the original equipment cost instead of $1, which results in a lower monthly payment.

At the end of the term, you may:

  • purchase the equipment for 10 percent of the original cost
  • continue to lease the equipment at a reduced rate
  • upgrade the equipment with a new lease

Fair Market Value Purchase Option Lease
Our Fair Market Value (FMV) Lease is specifically designed for customers who:

  • require the lowest monthly outlay
  • want to off-load equipment risk
  • desire flexibility to upgrade their equipment as technology needs change
    Under the FMV Lease, we retains ownership of the equipment and passes those benefits along to the customer in the form of lower monthly payments. For certain equipment, FMV leases may qualify for off balance sheet financing as well as providing utilization of the equipment you need without adding to your assets.

Lease terms are typically two or three years. We can accommodate longer or shorter terms if your needs require. At the end of the lease term you may:

  • purchase the equipment for its then fair market value
  • continue to lease the equipment at a reduced rate
  • return the equipment to us with no further obligation

90-Day Deferred
To accommodate customer cash-flow constraints, the 90-Day Deferred is structured with no payments during the initial three months of the lease.

Step Lease
Another way to ease into an equipment acquisition is with our Step program. A typical Step program starts out with a reduced payment for the first 12 months and then the payment "steps" up for the remainder of the term. Other arrangements, such as multiple steps during the term, can be created to meet your needs.

Skip Lease
Businesses located in resort communities may see a decreased business revenues in the off-season, resulting in a tighter cash flow. For those situations, we offer Skip, a lease where a predetermined number of payments, usually three, are "skipped" at the same time each year.

Complete Flexibility
No matter what your requirements, the professionals at GE Express Financial Solutions can structure a leasing program to meet the needs of your business. We provide client-friendly documentation, an easy approval process and attractive financing rates. In addition, our financial sales people work closely with our equipment and service representatives to ensure that you receive a total solution that will support your business today and in the future.

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Frequently Asked Questions

Who can lease from GE Capital?
Can leasing help "cash flow"?
Is there a down payment?
How are lease payments structured?
Can payments be adapted to seasonal cash flow needs?
What can be done to lower lease payments?
Can I renew or extend a lease?
Can I purchase the equipment?
What is a "fair market value" purchase option?
How long does the lease application process take?

Who can lease?
Any sole proprietorship, partnership, corporation (including a nonprofit corporation or S corporation) or trust may be a lessee under a GE Capital Lease agreement. With certain exceptions and restrictions, even a state, a county, a school board or a municipality may be a lessee under a lease.

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Can leasing help "cash flow"?
Yes, leasing offers lower monthly payments than traditional financing options. These lower payments allow your business to better match revenue and expense and improved budgeting and forecasting.

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Is there a down payment?
Leasing is generally considered 100% financing, with the leasing company paying the entire purchase price of the asset and leasing it to the lessee with no down payment. Tax-oriented leasing requires the lessor to pay the full purchase price without any participation by lessee. However, in non-tax-oriented leases the lessee may be required to make a down payment.

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How are lease payments structured?
Lease payments may be fixed or floating, paid in advance or in arrears, and may even be structured to occur at irregular intervals.

Most leases are written with regular monthly or quarterly payments, although this is not a requirement.

Terms range from 24 to 60 months and can be customized to meet specific financial objectives.

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Can payments be adapted to seasonal cash flow needs?
Yes. Some industries experience predictable irregular cash flows and/or seasonal slowdowns due to weather conditions, market conditions or a variety of other reasons. For such businesses, leases may be arranged with payments due at irregular times, such as monthly from April to November only, in concert with the productive use of equipment.

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What can be done to lower lease payments?
Periodic (e.g., monthly or quarterly) lease rentals may be lowered by negotiating changes in the term or payment structure.

Extending the term. The longer the lease term, assuming level rentals, the lower the periodic payment. However, your aggregate rentals will naturally be higher over the longer period.

Changing the structure. By changing to an uneven or irregular payment schedule, payments may be lowered during periods when your business prefers lower cash outflows.

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Can I renew or extend a lease?
True leases may provide for extensions as long as the sum of the basic lease term and all renewal periods with predetermined rentals does not exceed the maximum allowed by the IRS. Renewals at the then fair market rental value do not have to be considered in applying the IRS test. Of course, these limitations do not apply to non-tax-oriented leases.

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Can I purchase the equipment?
Yes, at the end of lease term the lessee has the option to:
Return the equipment;
Purchase the equipment;
Re-rent the equipment on a month-by-month basis.

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What is a "fair market value" purchase option?
A "fair market value purchase option" gives the lessee the opportunity to purchase the equipment for its fair value (a price determined in an arms-length transaction). The price, if not agreed upon by the lessor and lessee at the time the option is exercised, is usually determined at such time by an appraiser or independent third-party, as specified in the lease contract.

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How long does the lease application process take?
Once GE Capital has received a completed credit application via fax, phone, mail or e-mail, a credit decision is usually rendered in 2 hours. After the credit application has been approved, the lease agreement is prepared and faxed or overnighted to the business. Once we have received the signed documents, the equipment can be released to ship.

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You should consult your tax, accounting, and legal consultants with respect to the applicability of the information contained on this site to your particular needs.

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Need more information? Please call our qualified salespeople to discuss leasing options at 1-8-MonarchPC or 1-800-611-0875.

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