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Terms are
available from 24 to 66 months for most types of equipment. There are several
different types of lease structures available.
Canadian
Lease Structures vs.
U.S. Lease Structures
Common
Canadian Lease Structures
Stretch Lease
Full Pay-Out
Fair Market Value
Stretch Lease
This is the most popular type of
lease provided by Alliance. In this type of lease, the contract is structured
as a true "Fair Market Value" lease, however, the contract provides for a
fixed, guaranteed "Early Purchase Option" that can be exercised by the
customer, after a specific number of payments. Here are the most common terms:
| Total Term |
Early Purchase Month |
Early Purchase
Amount (percent of original equipment cost) |
| 27 months |
24th month |
10% |
| 39 months |
36th month
|
10% |
| 52 months |
48th month |
10% |
| 66 months |
60th month |
10% |
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Other terms and purchase
options are available.
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Full Pay-Out
Lease In this type of lease,
after the end of the term, the customer can purchase the equipment for a
nominal amount; for example: $1 $10 or $100. This form of lease, while once
popular, is being used less and less by businesses, as the monthly payment is
of course higher than with a Stretch Lease, or Fair Market Value lease and many
accounting and tax professionals are advising businesses to avoid this type of
contract.
Fair Market
Value
Because this type of lease does
not have a fixed purchase option, it is designed for a customer that truly does
not want to own the equipment, but would rather return, upgrade, or continue to
lease the equipment at the end of the term. Depending on the type of equipment,
and its anticipated "market value" at the end of the proposed term, this type
of contract can provide the lowest payments. This type of lease is most ideally
suited to technology equipment. Note that if the customer wants a combination
of a lower monthly payment and a guaranteed purchase option, then a Stretch
Lease provides the best alternative.
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Common
U.S. Lease Structures
Full Pay-Out
Lease 10% Buy-Out
Lease Fair Market Value Lease (True Lease)
Full
Pay-Out
Lease Designed for those who
are certain that they wish to own the equipment at the end of the lease term,
for the lowest possible end-of-term cost. At the end of the term, the equipment
is purchased for $1. A nominal charge for processing a title transfer may
apply. The monthly payments on a Full Pay-Out lease are generally higher than
other types of plans. This type of lease plan is not offered in all States.
10%
Buy-Out Lease
This plan offers a lower
monthly payment than a Full Pay-Out lease, as 10% of the original equipment
cost is deferred to the end of the term. At lease end, the customer can
purchase the equipment for an amount equal to 10% of the original cost. Other
options may also be available to the customer at this time, including: return
the equipment, extend the term or refinance the equipment.
Fair
Market Value Lease (True Lease)
Because this type of lease does
not have a fixed purchase option, it is designed for a customer that truly does
not want to own the equipment, but would rather return, upgrade, or continue to
lease the equipment at the end of the term. Depending on the type of equipment,
and its anticipated "market value" at the end of the proposed term, this type
of contract can provide the lowest payments. This type of lease is most ideally
suited to technology equipment.
 
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