5 Things You Need to Know About a Master Lease Agreement

5 Things You Need to Know About a Master Lease Agreement

U.S. companies are ramping up borrowing and signed up “ $5 billion in loans, leases and lines of credit in February, 22 percent more than the $4.1 billion a year earlier” according to the Equipment Leasing and Finance Association (ELFA). Much of that new spending is concentrated on technology. With increased interest in replacing aging equipment and acquiring new technology to increase productivity, many businesses are researching equipment leasing to stretch their budgets further.

If your company is one of them, there are five things you need to know before signing a master lease agreement.

  1. A master lease agreement is a governing agreement that may include a number of equipment schedules under it. It can be viewed as an umbrella agreement that a company leasing equipment may use to acquire additional equipment over time with the same lease funder without having to execute a new lease each time.
  2. Under each master lease agreement, there is a separate equipment schedule agreement that lists equipment leased, terms of the lease, pricing of the lease per equipment schedule, and end of lease options. If a company acquires equipment at two separate times for example, there would be two separate equipment schedules but only one master lease agreement.
  3. The end of lease terms on the separate equipment schedules that fall under a master lease agreement may be different.
  4. All the other terms –except end of lease– of the master lease agreement are incorporated into the equipment schedule.
  5. Once a master lease agreement is in place, a company does not need to renegotiate terms with a lease funder each time it adds a new equipment schedule to the master lease agreement. A master lease agreement speeds the process of acquiring equipment.

If you have any questions regarding a master lease agreement and whether it is right for your company please contact us.

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