IT Leasing and Equipment Leasing FAQs

IT Leasing and Equipment Leasing FAQs

1.What is a lease?

A lease is an contact agreement entered between a lessee and a lessor, where lessor is giving IT and related equipments for lease of a particular period of time.  Lessor will purchase IT and IT enabled equipments from any vendors by paying a particular amount. 

2. Who can lease?

In the leasing industry anyone can enter into a lease agreement, it they would like to lease equipments rather than buying it. The leasing companies are offering the services, depending on their area of interest. A lease have to check the services offered by lessors before finalising the leasing contracts.

3. Types of leasing services available?

Various types of leasing services are available depending on each industry. You can go for IT software leasing, IT hardware leasing, printing machine leasing, office equipment leasing etc.  The leasing services provided by each company differ from the other in terms of rate and contrast period. There are leasing contracts that will allow customers to own equipments by the end of the contract. And there are leasing contracts where a customer will be paying for the equipments for a particular period of time, or till the contract ends. By the end of the contract the lessee has to return the equipments back to the lessor. Here, the lessee will have the option to extent the lease contract by updating the existing contract.  

4. How lease rates are determined?

Leasing rates are based on your credit history, value of the equipment and the lease term. Most of the leasing companies wont change the leasing payment amount till the term ends. The leasing company will decide the payment and it will be the final term payment amount.  

5. What is Letter of Intent (LOI)?

This is the document drafted by the leasing company as part of entering into a contract agreement with the lessee, which will have information like the type of leasing equipment, contract period, leasing rate, number of equipments and the details of people who are binding with the contract. 

6. Difference between leasing and onsite cash payment?

Leasing is a term used by people who are into a contractual agreement, where a lessee will agree to pay a particle amount to the lessor as part of using the equipments. This will be a small amount that has to be paid on a monthly basis, or as per the terms in the contract.   

7. Credit score required to obtain an equipment lease?

Each country has its own way of determining credit score of its residents. Likewise, Australia also has got its own methodology to determine the credit score. The leasing companies will have access to it. They will check the credit score of the person who is applying for a lease and determine whether the person is eligible for a lease or not. 

8.Whether leasing companies take the credit score report before accepting an equipment lease?

Most of the leasing companies will pull your credit score before accepting your request. The companies will check the credit score only after asking your permission. 

9.Requirements to obtain an equipment for lease?

First step is to submit a lease request with the company with whom you want to establish a leasing connection. The leasing company will check your finance credentials and the leasing structure in which you are falling into. This will be communicated with you by providing a letter of intent. In this document the company will specify all the details related to your leasing requirement, including payment and terms of contract.

10. Whether lease payments are eligible for tax cuts?

In most of the cases the leasing amounts are eligible for tax deductions. You don't have to show lease payments in the taxable income form, if lease payments are coming under the FMV lease section.