What is Lease Purchase Financing?
As municipal entities are working hard to protect and serve their communities the proper equipment is necessary, but the funds to update equipment are not always available when needed. Lease Purchase Financing (LPF) is a method for local governments and nonprofits to acquire the property and equipment they need through manageable installment payments consisting of principal and interest. In virtually every state, lease purchase financing does not require any form of voter approval, allowing the governing body to respond quickly, fulfilling equipment needs as they arise. The customer takes an ownership interest in the property from the onset of the lease and builds equity with each installment payment. At the end of the repayment term, the customer receives the property free and clear.
Flexible and Affordable
For municipalities, lease purchase financing is not considered debt because the local government must make annual appropriations for the lease payments. There are no large, up-front cash payments required and interest rates are very competitive. Payment terms are flexible and can be tailored to fit your budget.
Lease Purchase Financing can be used to pay for big-ticket items such as buildings or vehicles, as well as smaller essential purchases such as SCBAs, turnout gear, and air compressors. By working with our expert staff, you can bundle multiple purchases from different vendors and allocate funds for new or used equipment.
Lease Purchase Financing vs. Bonds
|LEASE PURCHASE FINANCING||BONDS|
|Not considered debt - year to year commitment using available revenue sources||Pledging of designated revenue sources required|
|No voter approval needed (in most states)||Lengthy voter approval process|
|Simple documentation with one investor||Lengthy documentation, varying maturities, call provisions, and multiple investors|
|Flexible payment structure to meet your specific needs||No flexibility in payment structure|
|Easy credit approval process||Ongoing credit review by potential investors|
|Simple interest calculations with equal payments consisting of principal and interest||Compounding of interest results in higher overall interest costs|
|No additional costs - upfront issuance, closing, and trustee fees are not required||Multiple fees - tax opinion, bond counsel, and trustee fees.|
Note: FastLane partners with Community Leasing Partners for its financing.