What is a Lease or Equipment Finance Agreement (EFA)?
A lease or EFA is a contractual agreement between two parties whereby the lessor or secured creditor allows the lessee or debtor to use the equipment for a specific period of time in exchange for a series of payments.
There are three parties involved in a lease or EFA transaction:
Lessee or Debtor (customer)
Lessor (owner of equipment who will finance the lease) or Secured Creditor
Equipment Vendor (supplies the equipment)
Roles of Both Parties
Lessee or Debtor:
Chooses equipment vendor
Agrees to all contractual obligations of the lease or EFA
Lessor Secured Creditor:
Owner of the equipment (Lessor) who purchases the equipment from the vendor
Remits payment to the vendor for the cost of the equipment
Bills and receives payment from lessee or debtor
The Finance Process
Step One: Vendor proposes a lease solution to acquire necessary equipment and customer accepts
Step Two: Vendor has lessee complete a credit application and submits to (Lessor)
Step Three: (Lessor) performs credit review on lessee or debtor
Step Four: If approved, customer completes all necessary finance documents
Step Five: (Lessor) receives all necessary finance documents and approves delivery of equipment
Step Six: Equipment is delivered and accepted by lessee or debtor
Step Seven: (Lessor)pays for the equipment and commences the lease or EFA
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