They are all the same, aren't they? Absolutely, positively... not! We are of course talking about the equipment finance company industry in Canada and how your selection of the right partner can determine which advantages and disadvantages you can enjoy... or suffer with. We prefer positive advantages that your business can benefit with, not Canadian business financing decisions that you will suffer via the wrong choice of a lease partner for your specific needs.
Ok, so what in the heck are we talking about? Essentially there are four types of asset finance partners in the equipment leasing industry in Canada. And you thought that a lease finance company was a lease finance company!
The first type of partner is the 'captive' - no you are not the captive! The term refers simply to finance companies that are owned and literally situated within various manufacturing firms. When clients ask us about lease finance options and they mention specific equipment we are always reminding them to ensure they determine if the manufacturer captive finance firm offers asset financing. If they do we can assure you it is probably the best financial terms you will be able to come up with, as well as a better chance for overall approval re rate, structure and other general terms. Why is that?
It's to do with motivation - the captive finance firm is motivated to finance and promote the sale of products using financial options such as leasing to get the products out to the marketplace. Want to know a secret that should surprise most business owners and financial managers? It's simply that captive finance firms in a competing industry will finance their competitor's products, often at better rates, terms and structures. That is simply because the financial transaction will probably give the competing mfr a foothold into your business to promote and sell their own products. So don't think that a great firm such as IBM CREDIT CORP. is the only firm that will finance your products you purchase through them. Others will also!
The second main group of asset finance firms in Canada is our chartered banks - Two major banks have leasing arms that are very significant, others employ lease finance to varying degrees. Our real only comment here is that the credit bar is high and more often than not you have to be a customer of the bank to enjoy the great lease and finance structures they offer.
The third main category of the Canadian equipment leasing company market is actually the largest and most robust. It also requires the maximum amount of knowledge and navigation by Canadian business owners and financial managers. This is the Independent lease finance market, where there are tens of firms that offer lease financing based on various criteria of asset size, credit quality, geographical preference, industry specialization, etc, etc, etc.
You have a great choice with our category 3 partners, the independent finance companies. You can spend tens or hundreds of hours determining their credit criteria, additional collateral they require, the size of deals they do, the different lease structures they offer, or... alternatively.. use our final category for lease provider, the independent lease finance advisor who are knowledgeable intermediaries who know the market, have a strong reputation with lease providers, and can match the advantages you seek in an equipment finance transaction to the right provider. Subtle nuances in your overall lease structure, depending on the size of your transaction, can save you thousands of dollars and untold grief at the end of the term of your lease.