Lease One Northwest, LLC

Lease FAQs

Q: What are the primary types of leases?

Capital Lease / Finance Lease / $1 Buyout - May also be referred to as a nominal or dollar-buyout lease.

These leases share the advantage of fixed monthly payments but with the guaranteed option to purchase the equipment for a nominal price at the conclusion of the lease.

Unlike the Fair Market Value Lease (below) Finance type leases may not qualify under IRS regulations for deductibility.

Fair Market Value Lease - also known as Operating or True Lease

The significant benefits are:

The monthly payments are less than on a finance type lease (above) or even a bank loan. Typically, the lessee either returns the equipment at the conclusion of the lease or may be granted the opportunity to purchase the equipment for a “fair market value.”

Payments under this kind of lease are structured (by the IRS) as rental payments and therefore, are 100% tax deductible operating expenses.

The “P.U.T.” Option Lease (Purchase Upon Termination)

This end-of-lease option establishes a mandatory purchase price, usually expressed as a percentage, e.g. “a 10% Put.” This is a technique for lowering the lease payments during the lease term without creating an unknown end-of-lease risk for either the lessor or the lessee. Lease payments are fixed.

TRAC Lease

A TRAC lease is a special type of true lease that is generally used for “over-the-road” vehicles like trucks, tractor and trailers. Special provisions of the I.R.S. code allow for pre-determined residual values (as opposed to “future, fair market values) to be negotiated in advance while maintaining the “full deductibility” of a true lease.

This type of lease is generally less expensive then other leases or conventional bank financing.

The lessor would retain the rights to any depreciation.

Q: What is an Equipment Sale/Leaseback?

Equipment Sale/Leaseback

Is a flexible source of capital that can help when resources are stretched thin. Specifically, a company sells an asset for cash. The asset is then leased back to the company under a new contract. The leased equipment never leaves the premises and usually remains under the same service contract.

Q: Can I fund equipment from various vendors with one lease?

Yes - this is a “blanket” lease

Under the terms of this type of lease, you can get office equipment, industrial equipment, restaurant equipment (for example) from multiple vendors and bundle the equipment into a single lease. The “blanket” lease is a convenient way to avoid paying multiple vendors - simplifying budgeting and the accounting process.

Q: What are the various lease payment terms?

Lease Payment Terms are generally flexible (unlike most bank loans) and can be designed to fit your unique situation. Popular lease options include:

Annual, Semi-Annual or Quarterly Payment Programs

for those with highly seasonal cash flow

Step Up Programs

Provides time for the asset to begin improving cash flow. Examples include:
- 7 x $100 - pay only $100 p/month for the 1st seven months of your lease
- 60 or 90 day deferred - make no payments for up to 3 months

Pulsing Payment Program

Flexible payment program to meet your seasonal cash flow. For example: Spring and Summer - payments, Fall and Winter - no payments.

The 1% Solution

1% of the cost of the equipment is all that’s required!

10% Security Deposit = Buyout

A Prepaid Purchase Option Plan. Security deposit may act as buyout of the lease at the end of the lease term.

Lease One Northwest LLC,

1033 Sweetwood Circle, Nampa, ID 83651

Office: (208) 465-3402, Fax (866) 795-1647