RM Online - Plenty of financing avenues open, but do your homework

Today there is a large surplus of capital out in the market, waiting to be loaned out or invested. I think that as rental store operators, we have more avenues available to acquire inventory than at any time in the past. We can still pay cash, use a bank loan or a bank line of credit, use manufacturers' financing or finance through a leasing company.

Leasing is becoming more popular. When you replace old inventory or expand your inventory, you can lease/purchase many of the items.

Before entering into a lease agreement or any other financing program, check out a few things - be prepared. Ask about the finance rate you will be paying. Does the rate vary with the amount financed? Beware: there may be a UCC lien placed on the items; that seems to be pretty common these days.

Call your insurance company, especially if you are leasing; make sure your policy covers the leased equipment and if need be, adjust your policy so that it will.

Talk to your accountant about handling the leased equipment and payments on your records. Keep good, detailed records of what you have leased and the cost of each item. If you are leasing a trailer that needs to be registered every year, make sure that your company has a system to handle the registration and keep it up to date.

Leasing is usually a viable financing option for many rental stores. Just be prudent, as you would with any other purchase.

When you work with a leasing company to buy items from several different manufacturers, find out how they prefer to do such a deal and the process will go much smoother.

Also, remember that if a customer doesn't have ready cash to buy something, a leasing company may be found to lease/purchase the item for him or her. You can use this option to increase your sales.

If you have a rental industry issue on your mind, please call me: (602) 278-3515; e-mail: KHES44A@prodigy.com; and mailing address: 2825 W. McDowell, Phoenix, AZ 85009.