Lease Pricing

Pricing a lease to produce a win/win proposal may take a little creativity. You may need the brilliant lease structure to win a deal and the right solution to make it happen.

The key to closing a deal is to know what you can offer, what your customer can pay, and how to get there. The “how” may be the key to the deal. You need to know the capitalized cost, the date of the first payment and how many, the desired term, and any residuals to tie these factors into the yield. Once you have these components, you have flexibility to create the payment stream or cash flows. That is where TValue comes into play.

TValue is the lease pricing software that allows you creativity in pricing leases while maintaining your yield. When we say “creativity”, here are numerous examples of how you can structure an equipment finance lease:

• Flat payments throughout the term. This is easy. That is how most leases are structured.
• Quarterly, semi-annual, or annual payments. Not all leases are monthly!
• Have deferred payments for three or six months and factor them into the regular payments and yield.
• Incorporate skip payments for seasonal leases when your customer has lower cash flow, e.g. farmers, and higher payments when they have stronger cash flow.
• Do “Interest only” payments on the front end of the lease to minimize the early cash flow requirements.
• Design a split lease with different payments for different periods over the term of the lease.
• Finally, show your customer detailed lease amortization schedules with their projected lease payments.

As long as your lending source will work with you, you have numerous options on pricing the deal and closing the sale. Here is a great quote that says it all, “Don’t sell them what you have, rather sell them what they need.” James Johnson, Ph.D., Power Tools for Successful Leasing.

Finally, you can calculate your commission by using the buy and sell rates on the lease or you can figure out your commission, add in the buy rate, and determine the sell rate. This is very important to know how much you are going to make on the deal and how much you are going to charge.

TimeValue Software has more information at https://www.timevalue.com/tvalue-leasing and has two recorded webinars on basic and advanced lease pricing that you can view from our Archives at https://www.timevalue.com/webinars.

If you have any questions on pricing a deal using TValue software, please give our Support Team a call at 800-426-4741 or shoot us an email at support@TimeValue.com.