Leasing Frequently Asked Questions
| MacPhee Leasing | Lease Info Request | About Leasing | Leasing Terms and FAQs |
- Who can lease from MacPhee Leasing?
- Is there a down payment?
- How are lease payments structured?
- What can be done to lower lease payments?
- Can I renew or extend a lease?
- Can I purchase the vehicle?
- How long does the lease application process take?
- Who is responsible for insuring a leased vehicle?
- Who is responsible for maintenance and repairs on a leased vehicle?
- Is it possible to lease a late-model used vehicle??
- Will I be stuck paying fees and repair bills at the end of a lease?
- When the lease term is completed, will I own the vehicle?
Q. Who can lease from MacPhee Leasing?
A. Any person(s) or any sole proprietorship, partnership, corporation (including a nonprofit corporation or S corporation) or trust may be a lessee under a MacPhee Leasing Lease agreement. With certain exceptions and restrictions, even a province, a county, a school board or a municipality may be a lessee under a lease.
Q. Is there a down payment?
A. Leasing is generally considered 100% financing, with the leasing company paying the entire purchase price of the asset and leasing it to the lessee with no down payment. With virtually every lease there is always your first payment due at signing, along with license fees
Q. How are lease payments structured?
A. Lease payments are based on a fixed rate, paid in monthly installments.
Most leases are written with regular monthly payments, due on the first of each month.
Terms range from 24 to 60 months depending largely on the year, make, model of the vehicle and your credit history, and can be customized to meet specific financial objectives.
Q. What can be done to lower lease payments?
A. Extending the term: the longer the lease term, assuming level rentals, the lower the periodic payment. However, your aggregate rentals will naturally be higher over the longer period.
Equity down: Any lease is open to have the payments lowered by bringing equity into the lease, be it by cash down at signing, or in most cases, a trade-in is allowed.
Q. Can I renew or extend a lease?
A. Some leases can be extended at the prevailing rate at the time, and usually the payments can be maintained or even lowered.
Q. Can I purchase the vehicle?
A. Yes, at the end of lease term the lessee has the option to:
Return the equipment;
Purchase the equipment;
Re-rent the equipment on a month-by-month basis.
Q. How long does the lease application process take?
A. Once MacPhee Leasing has received a completed credit application via fax, phone, mail or e-mail, a credit decision is usually rendered in 2 hours. After the credit application has been approved, the lease agreement is prepared arrangements will be made for delivery or pick-up. Once we have received the signed documents, the vehicle can be ready to go!
You should consult your tax, accounting, and legal consultants with respect to the applicability of the information contained on this site to your particular needs.
Q. Who is responsible for insuring a leased vehicle?
A. With a lease, the customer or lessee is responsible for obtaining and paying for insurance on the vehicle. The vehicle must have full insurance coverage, including a minimum of $1,000,000 personal liability coverage, and maximum of $250.00 deductible on collision and comprehensive coverage.
Q. Who is responsible for maintenance and repairs on a leased vehicle?
A. Just like a traditional finance, the customer is responsible for all necessary maintenance and repairs, including oil changes, filters, brakes, tires, and other items not covered by the manufacturer's warranty. If a leased vehicle does not have any manufacturer's warranty remaining, the customer would be responsible for any mechanical repairs. Extended warranties are available for a reasonable monthly premium on most leased vehicles to protect the customer from expensive repair bills.
Q. Is it possible to lease a late-model used vehicle?
A. Absolutely! Many people have the misconception that leasing applies to new vehicles only. Leasing may be a very feasible financing option on a used vehicle, enabling the customer to obtain low monthly payments. Keep in mind that interest rates on used vehicles tend to be higher than on new ones, and available financing terms are usually shorter.
Q. Will I be stuck paying fees and repair bills at the end of a lease?
A. If you choose to purchase the vehicle at the end of the lease term, there are no additional fees to be paid. However, if you turn the vehicle in, you could be faced with additional charges if you have exceeded the allowed kilometre restrictions, if you have not performed required maintenance on the vehicle, or if you have not repaired any damage caused to the vehicle during the lease term. If you are within your kilometre restrictions, have performed the required maintenance, and there is no damage to the vehicle, there would be no reason to expect any further charges.
Q. When the lease term is completed, will I own the vehicle?
A. No. In order to own the vehicle, you must pay the buyout or lease end value amount plus any applicable taxes.
Leasing Terms
Lessee
The customer who is leasing the vehicle
Lessor
The company that owns the vehicle, and agrees to lease it to the lessee
Closed End Lease
In a closed end lease, the lease does not guarantee the end value of the lease. He or she normally has the option to purchase the car for the end value amount, or simply turn the vehicle in. Because the lessee has the option to "walk away" at the end of the lease, they are subject to kilometre restrictions and an excess wear and tear clause.
Open End Lease
This is a lease agreement in which the lessee guarantees the end value of the vehicle at the end of the lease. Because the lessee is guaranteeing the end value or residual, there are no kilometre restrictions or wear and tear clauses.
Term
The length of the lease, usually expressed in months.
Kilometre Restrictions
In a closed end lease, the lessee is allowed to drive a certain number of kilometres over the term of the lease. There is normally a charge per kilometre if the total allowed kilometres are exceeded.
Excess Wear and Tear
When a vehicle is leased, the lessor does not expect that the vehicle will be returned in the exact same condition that it was in when leased. Normal wear and tear is the strain that the vehicle is subject to due to normal use. In a closed end lease, the lessee is responsible for any wear and tear that is in excess of normal.
Residual
This is the amount that a leased vehicle can be purchased for at the conclusion of a lease. Sometimes also referred to as the "buyout" or "lease end value". In most circumstances, a lessee in a closed end lease contract will have the option to buy the vehicle for the residual value. The situation is different with an open end lease, in which the lessee must guarantee the residual value (see open end lease).
Security Deposit
Funds collected upon delivery for security, typically being equal to one month's lease payment (on approved credit). This security deposit is held for the duration of the lease, and refunded at the end of the lease, provided that there are no charges for excess kilometres or excess wear and tear.
Capitalized Cost
The price of the vehicle, net of any down payments or trade ins.
Capitalized Cost Reduction
An amount paid by the lessee to reduce the capitalized cost of the vehicle, and thus reduce the monthly payment. In a purchase, it is referred to as "cash down".
Leasing Options Available
Lease Products
Because no two businesses have the same equipment needs or financial requirements, we offer a variety of lease financing options.
$1 Purchase Option Lease
For businesses looking for new technology and equipment ownership, we offer a $1 Purchase Option Lease. This is a loan-based product with a $1 purchase option at the end of the lease term. Since this is a capital lease, your company may qualify for interest and depreciation deductions for tax purposes. The term of the lease is usually three to five years. We can work with you on other terms that may better fit your needs.
10% Purchase Option Lease
For customers wanting the features and benefits of a $1 Purchase Option Lease but are looking for a lower monthly payment, the 10% Purchase Option Lease is the ideal product. The 10% Purchase Option Lease is also a loan-based product with a fixed purchase option at the end of the term of 10 percent of the original equipment cost instead of $1, which results in a lower monthly payment.
At the end of the term, you may:
- purchase the vehicle for 10 percent of the original cost
- continue to lease the vehicle at a similar, or sometimes lesser payment
- upgrade into a new vehicle model with a new lease
Fair Market Value Purchase Option Lease
Our Fair Market Value (FMV) Lease is specifically designed for customers who:
- require the lowest monthly outlay
- want to off-load equipment risk
- purchase the vehicle for its then fair market value
- continue to lease the vehicle at a reduced rate
- return the vehicle to us with no further obligation
Complete Flexibility
No matter what your requirements, the professionals at MacPhee Leasing can structure a leasing program to meet the needs of your business. We provide client-friendly documentation, an easy approval process and attractive leasing rates. In addition, our financial sales people work closely with our sales and service representatives to ensure that you receive a total solution that will support your business today and in the future.
