Equipment Finance Agreement (EFA) and a Lease Agreement - What’s the Difference?
Customers often ask what the difference between an Equipment Finance Agreement (EFA) and a Lease Agreement.
An equipment finance agreement can be looked at as being somewhere in between a lease and an equipment loan. If you put an equipment finance agreement and lease agreement side by side, you will see that all of the where to's, where after’s and whatever’s are almost the same. As for you, the end user, there is no difference in your commitment.
You will have the option to own the equipment at the end of the term with both EFA's and leases. The real advantage of an EFA is when you compare them to bank loans.
With a bank loans or lines of credit it is often subject a lien on all your assets, your accounts receivables and everything you own now and will buy in the future as collateral for a loan. They will probably want your wife, children and pets as well. On the other hand an EFA or lease is not secured by all of you stuff but the equipment being financed or leased.
Also many bank loans are tied to a market rate somewhere on the planet and not fixed as with EFA's and leases which may/will go up or down over the term of the loan. Bankers have this wonderful thing called loan covenants that says you will maintain certain financial ratios, these ratios could restrict your ability to borrow at a later time in the future and heaven forbid that you violate one or more of the covenants, the banker will have the right to come knocking on your door and demand that you pay your loan in full even though all of the payments were made on time.
START YOUR EQUIPMENT LEASE TODAY!
At the Harris Leasing Company, we take the time to get to know you and your business needs regardless of your credit history or if you are just starting out. Our specialists will work with you to develop a custom finance program. Let's get started today! Simply call 713-783-7820 to speak with a representative OR start the application process here