McC&A

TYPES OF TRANSACTIONS

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	Providing your customer with the best product to fit their needs is what the sales process is all about.
	FINANCE LEASE – Also known as an equipment finance agreement (EFA) Though documented as a lease, this is technically a conditional sale contract set up for a fixed period, usually between 12 and 72 months. The end of lease option is typically for a pre-set amount, such as one dollar, or 10% of the equipment cost. TRUE LEASE - A fixed term contract; however, rather than a pre-stated end of lease payment, the lessee may: Purchase the equipment for its then fair market value. Renew the lease for an extended period at fair market renewal. Return the equipment to lessor. OPERATING LEASE - Mostly offered by manufacturers. The payments can include maintenance and insurance. The lessor would take a residual position in the leased equipment and defer much of their profits until the end of the lease term. The equipment would then be sold or leased for additional periods. SALE LEASEBACK - Used when a company would like to retrieve some of the capital it has invested in equipment. The company sells the equipment to the lessor for a percentage of the original purchase price. The equipment is then leased back to the company. This is for companies heavily invested in equipment, but needing to improve cash flow. MUNICIPAL LEASE - A municipality is a state, city or county (parish) government as well as districts (school, water, etc.), funded by tax dollars. All municipalities need a "funding out clause" in the lease, which states that should funds not be appropriated for lease payments in any fiscal year within the lease term, the municipality can cancel the lease and return the equipment without further obligation. SECURED TRANSACTION - These transactions are documented using any of the above structures, but an enhancement is used in order to reduce the lessor’s risk. The enhancements typically are first or second liens on real estate, cash value insurance policies, certificates of deposit or letters of credit.

                                       McCormick & Associates, Inc. /Eastern Equipment Associates
                                     2470 Vintage Drive
                                      Colorado Springs, CO 80920
                                      United States

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