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Fast Fact

The main reason why equipment leasing continues to grow is that leasing meets the needs of so many types and sizes of companies.

Products

Kinetic Leasing offers a wide variety of leasing products, providing you with the flexibility to meet the needs of your business:

  • Finance or Capital Lease
  • True or Tax Lease
  • Operating Lease
  • Municipal Lease
  • Lease Line of Credit

The following is a description of each of the lease products:

Finance or Capital Lease
This lease is referred to as a non-tax lease, whereby, the lessee can acquire use of an asset for most or its useful life. From a financial reporting perspective, this lease has the characteristics of a purchase agreement, with the underlying equipment shown as an asset and the accompanying lease depicted as a liability on the lessee's balance sheet. The lessee then expenses the depreciation and interest associated with the lease on its income statement.

  • Up to 100% financing
  • Lessor does not select manufacturer or supply equipment
  • Various purchase options - commonly $1.00 or 10%-15% of equipment cost
  • Similar to purchase agreement - utilizing loan financing

True or Tax Lease
A true or tax lease is a transaction which qualifies as a lease under the Internal Revenue Code such that the lessor takes on the risks of ownership and the lessee is allowed to claim the entire amount of the lease rental payment as a tax deduction. Under this type of lease, the lessor claims the tax benefits of ownership including depreciation.

  • 100% financing
  • Fair market value purchase option
  • Low lease rental payments
  • Off balance sheet financing for lessee

Operating Lease
A short term lease whereby, the lessee can acquire the use of an asset for a fraction of the useful life of the asset. Typically, in this lease type, the lessor has taken a significant residual position in the lease pricing and, as a result, must salvage the equipment for a certain value at the end of the lease term in order to earn its desired rate of return on the transaction. All operating leases are considered tax leases, as a result, the lessor is the owner of the equipment underlying the lease and the lessee is entitled to claim the entire amount of the lease rental payment as a tax deduction.

  • Short term
  • Typically involves a residual position funded by the lessor.
  • Off balance sheet financing for lessee

Municipal Lease
This lease is basically a conditional sales contract disguised in the form of a lease which is only available to municipalities. Under this lease type, the interest earnings on the lease are tax-exempt to the lessor and the lender purchasing/discounting the lease. It is noted that a municipal lease would never be considered a true or tax lease, as this lease must be structured with a $1.00 buyout at the end of the base lease term.

  • 100% financing
  • $1.00 buyout only
  • Reserved only for municipalities including but not limited to:
    - Cities
    - Counties
    - Park Districts
    - County/City owned hospitals and clinics
    - School Districts
    - Fire Departments

Commonly asked questions regarding municipal leases

Lease Line of Credit
Pre-approved credit line which allows the lessor to purchase equipment on the lessee's behalf until such time as all equipment which is intended to be placed on lease has been delivered and installed. This product accommodates equipment installations which occur over an extended period of time, and does not require the lessee to secure interim financing with another lender, or tie up its existing lines of credit.