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Leasing Customer FAQs
Important Customer Questions Answered
Doing Business with Avalon Leasing
What benefit do I have conducting business with Avalon Leasing?
Our company has a twelve year history of providing superb service to both leasing customers and their selected vendors. We professionally and ethically present lessees with leases designed to fit their budget with the additional considerations of the use and life span of the equipment in mind. We further work very hard to obtain approval terms that deliver the best pricing and terms for your company.
What is your history in the leasing industry?
Our president, David Meltzer, has 22 years of leasing experience, 12 of that as president of Avalon. Margaret Campbell Meltzer, treasurer, has assisted in the daily operations of Avalon Leasing since its inception. Our family run organization provides personal service that is not available at larger institutions. However, our excellent reputation allows us access to many hand selected funding sources nationwide.
How do I know my information will be retained in confidence?
Avalon retains all information in the utmost of confidence, with only our funding partner being privy to application and documentation information. We do not send unwanted faxes and email newsletters are delivered by permission only. Sensitive information delivered over the web is sent securely.
What information is needed to start my lease application?
The company name and address, time in business, bank reference, and information on the primary shareholders if closely held are all that is needed. Our one application page form can be downloaded from here.
How long does it take to receive a credit answer?
Assuming the application was completed fully, most requests for under $75,000- receive a credit reply inside eight business hours. Sometimes approvals are generated inside one hour!
My application is over $100,000. What information is needed?
If your requested amount exceeds $100,000- we require two years of business tax returns or reviewed/audited financial statements. This information may be required for lower dollar requests depending on the credit profile. Personal tax returns are needed also if the company is closely held. Interim statements are may be requested. The response time for a credit package application is about one day from receipt of complete information.
Does Avalon have a loan program?
Yes! We now have a Working Capital Loan program. Fixed rate loans for amounts from $15,000- to $150,000- are available. The rate depends on the amount borrowed. Call (888) 332-8007 or click here to print a prequalification form.
What does Avalon require to approve a small ticket lease?
In general, we look for the lease applicant to have the reasonable ability and willingness to pay back the amount of the lease payments over the term requested. This means overall credit profile should show clean payment histories with suppliers, no NSF checks, and relatively clean personal credit of the primary shareholders.
Our company has been in business a long time. Are personal guarantees required?
If the company is stable, has a wide base of customers, and has been in business for ten plus years then a guaranty of the owner may not be required. Longevity and number of employees are factors.
Are there any rule of thumbs I should know about before applying?
Yes. Do not shot gun, or apply to many leasing companies for the same lease as this lowers credit scores and this activity will be cause for a decline at most lessors. Do include full information, and fax the vendor quote along if in hand. If your credit history needs explaining a call is highly recommended first. Other than that, proceed with the application which can be accessed here.
Can Avalon approve credit applicants who have a few bumps and bruises in the past?
We happily review all applications to help our customers acquire the equipment they need for their businesses. If your credit is B or C rated, then include an explanatory cover sheet or call (888) 332-8007 to discuss your unique situation. At that time approximate payments will be quoted, and a letter can be faxed over to you.
How is a lease payment calculated?
We use multipliers, or factors, that provide a return of the funds paid to the vendor, plus a return on our investment including risk factors and a reasonable profit. The longer the term the lower the payment.
Is the payment fixed or variable?
Payments are fixed for the life of the lease, although we can write leases with nominal payments, such as 1% per month, for the first six months of a standard lease. Regular payments commence month seven.
My bank is less expensive. Why should I lease?
Your bank's payment IS less expensive. However, leasing brings the customer the greatest financial benefits. This may sound odd, but nonetheless is accurate. Click here to view an example of how the bank's loan, or paying cash, is more expensive than selecting leasing to acquire your equipment. Also, most bank lines charge annual fees of one percent of the line, which can increase your cost by three to five percent. Avalon does not charge any annual fee.
What is the interest rate?
Leases are rentals for the use of equipment and, as such, there are no interest rates associated with leasing. Liken it to leasing office space or a car. Factors such as residual assumptions and risk come into play. Also, the primary concern should be the after tax cost of leasing the equipment, as noted under tax benefits. An example of After Tax Savings can be viewed here.
What can be Leased
Are there any limitations as to what can be leased?
Avalon provides leasing for virtually all business equipment. Furthermore, we lease software up to 100% including training and conversion. The only items we do not lease are those of a hazardous nature or those with high default rates, such as tanning beds and ATM machines.
Can soft costs such as training, installation, shipping, build out, or software be including in my lease payment?
All soft costs can be included within reason. Our goal is to allow your company to obtain and use equipment with nominal cash outlay. We also allow excessive soft costs for technology driven equipment due to the high level of software and services required.
Everyone says leasing saves money. How much in taxes do I save?
In general, a true lease saves the lessee about 40% in taxes. This means a payment of $1,000.00 per month has an after tax cost of $600.00. This assumes 34% federal tax and 6% state tax. See Example.
Are there any tax benefits to a one dollar option lease?
Leasing customers can depreciate the equipment or IRS Section 179 Expense it, thereby reducing their overall costs. See Example
Are there any other financial benefits?
Yes. A primary reason so many companies lease is that the cost of leasing is much less than their return on equity. In other words, by using Avalon's funds to acquire and use equipment your cash can be then used for marketing, hiring employees, expansion, and other activities that produce far superior returns on capital.
How is the purchase option determined for a FMV, or fair market value lease? I am fearful of “being burned” at the end of the term.
Leasing is not regulated except by the ethics of the leasing companies themselves. Our FMV options are reasonable as to allow a lessee to acquire the underlying leased equipment at a very fair price at the end of term if so desired. Options range from 10% for longer term leases to 18% for very short term ones. Options can be fixed at the outset in writing if so desired.
Can I pay off my lease early?
At any time a lessee may pay off a lease. If possible, we will attempt to provide a figure less than the remaining payments. Please realize our income is built into the payment stream.
Who pays taxes?
The leasing customer is responsible for all taxes.
Can I add equipment later?
At the time of application Avalon can create a master lease, to which equipment can be added easily. Otherwise, based on your continuing credit, additional equipment can be leased. Less paperwork is required for lease add ons.
How much of a down payment is required?
For all lease terms except 12 months two advance rentals are required. This equates to about 4-6.5% of the cost of the funding amount. A small documentation fee applies also.