Frequently Asked Questions
FAQS on Leasing and Equipment Finance Agreement
Find comprehensive information on the various financial agreements we offer: Lease, EFA (Equipment Financing Agreement), and Standard P&I (Principal & Interest) Loan. Each type of agreement possesses distinct characteristics and benefits, designed to assist you in making an informed decision. Whether your inquiries pertain to payment terms, ownership, property tax responsibilities, or early payoff options, this section provides the answers you need.
Payment Terms
LEASE
A lease contract is essentially
a rental agreement. The
lessee agrees to make a
stream of payments for the
term of the lease.
EFA
Contract combines equipment
cost, taxes, expenses, and
finance charges then divides
over the term of the
agreement to create a
payment stream.
Standard P&I Loan
Borrower obtains purchase
funds in advance (principal)
and repays over time with
calculable interest.
Terms of ownership
LEASE
The lessor holds legal title to
the equipment. There’s
usually a buy‐out option at
the end of the lease term
based on the residual value of
the equipment at that time.
EFA
The customer maintains
ownership of the equipment
throughout the term of the
contract while the equipment
itself provides collateral for
the contract.
Standard P&I Loan
The borrower maintains
ownership of the equipment
throughout the term of the
loan while the equipment
itself provides collateral for
the loan.
Property Tax
LEASE
The lessor is considered the
owner of the equipment in a
lease agreement. We report
the equipment to your local
jurisdiction, are billed the tax
amount, and as part of your
lease agreement you
reimburse us.
EFA
The customer is responsible
for remitting any personal
property tax directly their
local jurisdiction as applicable.
Standard P&I Loan
The customer is responsible
for remitting any personal
property tax directly their
local jurisdiction as
applicable.
Pre‐payment and Early Payoff
LEASE
Pre‐payment of the lease
contract does not reduce the
costs calculated into your
payment stream.
EFA
Pre‐payment of the contract
does not reduce the financing
costs calculated into your
payment stream.
Standard P&I Loan
Pre‐payment reduces the
interest charged based on
principal and length of loan.
Therefore, the payoff
amount may be less when
paid off early.
Note: Both a lease and an EFA are structured to be non‐cancelable for the term indicated. As such, there may not be a pre‐payment penalty, however, there isn’t the same discount for paying off early as with a regular principal and interest loan as you will still be responsible for the sum of the remaining payments of the contract. Most contracts exercising an early payoff prior to the last six months of the contract will be calculated at the present value of the remaining payments at a discount rate of 4%, plus any applicable taxes, unpaid late charges, collection fees, or any
other sums due under the agreement. Refer to your contract for specific information regarding payoff discounts.
Pre‐payment Penalty
We work with many third‐party originating companies. Please review your contract agreement to determine if there is a pre payment fee charged by the originator. You may also contact the third‐party company you originated your contract with for more details.
Pro‐rata
We provide a monthly cycle of due dates. When starting your contract, it’s unlikely that it would start on a scheduled due date. Therefore, there is a prorated amount that appears on your invoice much like with a utility company. Pro‐rata is calculated by taking your monthly payment amount, divided by 30 days, multiplied by the number of days between when funds were released to your vendor and the commencement date of your contract.
Insurance
Our contracts require that insurance is in place to cover the equipment in the event of a loss. If you have an invoice showing insurance charges, we have not received proof of sufficient outside insurance coverage and have therefore placed our own coverage, per the terms of the contract. If you have questions, you may contact our insurance tracking company at [email protected] or 888‐423‐6722.
Credit Reporting Agencies
We report your payment history only to the business credit reporting side of Equifax, which is a business lending consortium known as the Small Business Financial Exchange or SBFE, and to PayNet. Your contract for repayment gives us authorization to obtain updates to your business and personal credit reports, as necessary, through the life of the contract.
