Our finance professionals will take the time to understand your business and design a finance program best suited for your situation:
Equipment Loans or $1.00 Purchase Option Lease
Both equipment loans and leases with a stated purchase option, such as $1.00, are products in which the lessee/borrower retains ownership of the equipment and is entitled to potential tax benefits, such as depreciation. This is a good option for equipment with a long useful life and the equipment may be depreciated on your balance sheet.
Equipment Finance Arrangement (EFA)
An EFA is a financing arrangement in which the customer makes payments to VGM Financial Services with the intent to own the equipment being financed. The customer is entitled to the depreciation associated with this type of transaction.
Installment Payment Agreement (IPA)
An IPA is a financing arrangement most often used for financing software licenses or non-tangible collateral. The customer makes payments to the debtor over a fixed amount of time and the customer is entitled to the tax depreciation benefits.
A tax lease is a good option for companies that would like to acquire new equipment every few years. Also referred to as a true lease, this product usually qualify as a tax deductible expense. VGM Financial Services retains ownership and related tax depreciation on the equipment with the lessee receiving the benefits through lower lease payments. End of term options vary based on the specific structure of a tax lease, but include purchasing the equipment, renewing the lease or returning the equipment.
If designated accounting criteria are met, operating leases often allow “off-balance sheet” financing for lessees, meaning the leased asset nor the rental payment obligation appear on the their balance sheet. VGM Financial Services retains ownership of the equipment and leases it for a term typically between 36 and 84 months. This lease is typically structured as a Fair Market Value (FMV) lease. At the end of the term, the lessee may purchase the equipment, renew the lease or return the equipment.
A capital lease meets one or more of the following criteria, meaning it is classified as a purchase by the lessee and the asset is included on their balance sheet: the lease term is greater than 75% of the property’s estimated economic life; the lease contains an option to purchase the property for less than fair market value; ownership of the property is transferred to the lessee at the end of the lease term; or the present value of the lease payments exceeds 90% of the fair market value of the property. The lessee claims the depreciation in a capital lease.
Lease Purchase/Finance Lease
A lease in which equipment can be purchased for a predetermined price upon lease expiration. This may be structured with either purchase options or purchase agreements and depreciation benefits are typically transferred to the lessee.
Lease and loan programs designed for equipment manufacturers, distributors, dealers and other sources to increase sales by providing their customers with equipment financing through VGM Financial Services. To find out more visit our Vendor Programs page.
Utilize our expertise. We offer sound guidance, flexible structuring and competitive financing. Call today to find out more.
* This information does not constitute tax advice. Consult with your tax advisor to determine how to use equipment financing to take advantage of expensing and depreciation tax savings or visit www.irs.gov.