Operating Lease (Fair Market Value Purchase Option):
At the end of the lease term, the lessee has the option to purchase the equipment for its Fair Market Value.
- Lease payments are charged to Operating Budget - avoids Capital Budget constraints.
- Lease payments are generally lower than all other leasing options - and are 100% deductible against taxable income.**
- Leasing can greatly reduce the Cost Recovery Period for equipment.
- Operating Leases are Off-Balance Sheet transactions and improve most financial ratios, including ROA, ROI, and -Debt/Net Worth measurements.
- Operating Lease payments are not an Alternative Minimum Tax (AMT) item.
** Many end-user/customer benefits available through leasing are tied to IRS guidelines (FASB Rule 13) concerning operating leases. These regulations limit (as a percentage of original equipment cost) how much any leasing company can charge during the initial term of the lease. This forces the leasing company to delay recovering its original investment until the end of the lease - when the customer has an "Option to Buy" the equipment. With an Operating Lease, the customer is not obligated to buy the equipment at the end of the lease, so the leasing company is "at risk" with respect to recovering their original investment. Most leasing companies just can't afford to take this type of risk. Others are not sufficiently knowledgeable about packaging and processing equipment to comfortably rely upon its value at the end of the lease - as we are. In either case, they don't offer Operating leases to customer.
CAPITAL LEASES (10% AND $1.00 PURCHASE OPTIONS)
10% Purchase Option Lease:
At the end of the lease term, the lessee has the option to purchase the equipment for 10% of the original equipment cost.
$1.00 Purchase Option Lease:
At the end of the lease term, the lessee has the option to purchase the equipment for $1.00.
- Fixed purchase options.
- Generally treated as a booked asset and liability on financial statements.
- Fully depreciable for tax purposes (under MACRS.)
- Preserves bank lines of credit for operations, real estate, or other capital expenditures.
To download the credit application for leasing please click here, American Packaging Capital Inc. is a third party lending service, and in no way affiliated with Generic Manufacturing Corporation or Resina®.
Leasing | Resina®