Leasing Terms Explained

Your operating lease from FlexiCommercial offers easy access to commercial finance from an institution that understands your business needs.

Operating Lease:

• An Operating Lease or Rental agreement is a contract between a lessor (the owner of an asset) and a lessee (user of an asset).  The lessor grants use of, and possession to, the asset for a periodic charge (monthly rental) defined in the Rental Agreement
• The rental installments are operating expenses for your business and are payable monthly or quarterly depending on the Rental Agreement
• If you are using the equipment primarily for business purposes you may be entitled to claim input tax credits for the GST paid.  GST is charged on the rental installment
• You are responsible for keeping the equipment in good repair and looking after the equipment in accordance with the manufacturer's recommendations
• FlexiCommercial is the owner of the equipment, however the Rental Agreement allows you to use the equipment that we have financed
• Subject to the terms of the Rental Agreement, you may:

• Offer to purchase the Equipment for the Fair Market Value of the equipment towards or at the end of the Fixed Term Lease;
• Upgrade to the latest technology via FlexiGroup and keep the existing Equipment by paying an amount negotiated with FlexiCommercial.  Subject to credit approval, FlexiCommercial may finance this negotiated amount in the cost of the new Rental Agreement;
• Extend the Rental Agreement for a further agreed Fixed Term for reduced rental installments;
• Return all the Equipment in good condition in accordance with the Rental Agreement;
• Continue to rent on a month to month basis until you decide the best way forward.

• If you decide to terminate the Rental Agreement and surrender the equipment to FlexiCommercial prior to the end of the Lease, the Rental Agreement will stipulate the termination expense that you will be required to pay
• As the operator of the equipment, you have relied on your own assessment for whether the equipment fits for the purpose for which you wish to use the equipment.

Agreement:

Contractual agreement between the lessor and lessee in relation to financial arrangements in acknowledgment of equipment to be leased.

Capital/Finance Lease (Conditional Sales Contract):

A capital lease is not a true lease, but rather a sale of equipment by the lessor to the lessee. When property is purchased it is capitalized and recorded both as an asset and as an obligation. The lessee may be eligible for a tax deduction. A capital lease meets one or more of the following criteria:

• The lessor transfers ownership to the lessee during the lease term
• The lease contains the option to purchase the asset at a bargain price
• The lease term is equal to 75% or more of the estimated economic life of the property
• The present value of minimum lease rental payments equals 90 percent or more of the fair market value using lessee's incremental cost of borrowing.

End of Term Options: 

Options available to lessees at the end of term when all payments have been made. Options include Flexi Upgrade, Flexi Extend, Flexi Offer and Flexi Return.

Read more about our flexible End of Lease Terms

Fair Market Value:

The value is the price for which the equipment could be sold in light of market conditions prevailing at that time.

Lease:

A contract between a lessor (owner of an asset) and a lessee (user of an asset) where the lessor grants the temporary possession and use of an asset to the lessee at a fixed periodic charge (monthly rental).

Lessee.

The entity that is leasing the equipment from its owner, the lessor.

Lessor.

The owner of the equipment to whom lease payments are made.