Financing FAQ
| A: What is the difference between an Operating Lease compared to a Capital or Finance Lease? Operating Leases offer the lowest monthly payment and the entire payment amount can be treated off-balance sheet and deducted as a business expense. An operating lease is generally used when products go through rapid technological changes and technological obsolescence is a concern, or when additional test capacity is acquired without using any capital expenditure budget. At the end of an Operating Lease, several return, renewal, or buyout options are available. A Capital or Finance lease is typically a full-payout or low-residual lease, where the asset is capitalized on the balance sheet. This is a good option particularly for those wishing to own the equipment. At the end of a Capital or Finance lease, the title is transferred to the lessee at the end of the term, upon the payment of a nominal fee. Consult your accountant or tax representative to determine the proper classification of lease. |
| A: What kind of term structures do you offer? Most of our associates offer leases with fixed terms starting from 24 months to 60 months, although shorter-term leases may also be considered upon request. |
| A: Can I bundle software licenses or support services with my hardware lease? Yes, software and services can be bundled, or included, in the total amount of the lease as well as maintenance, shipping, and other expenses. This enables you to have one single monthly payment for all your hardware, software, and services. |
| A: Are there additional start-up payments added to a finance agreement? Our leasing associates usually do not require down payments for qualified credit customers. However, on occasions, a down payment, loan origination fee, or security deposit may be required, which may be a way to lock in a lower rate. |
| A: Does Verigy include upgrades to the equipment in the lease agreement? Our financing associates’ lease agreements encourage upgrades throughout the contract term. We can easily set up your agreement to roll to new technology when it becomes available. We do not charge penalties for upgrades. |
| A: Who is responsible for the insurance, maintenance, and payment of property taxes? The lessee is responsible for maintaining the equipment and providing proper insurance. The expense of service and maintenance can be added to the initial lease. |
| A: Are buyout options available at the end of the lease or rental term? Several options are available at the end of term, depending on the lease structure. You can 1) buy out the equipment at fair market value; 2) extend the lease month to month at the same rate you have been paying; or, 3) extend the lease for a fixed term with a reduction in your lease payment. You can also return the equipment with no further obligation. Purchase options are subject to local legislation and accounting rules. |
| A: How can I impact my taxes? Operating leases may meet the tax criteria to be considered "off-balance sheet" and payments can be considered deductible operating expenses. Please consult your accountant for specific guidelines. |
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A: What will it cost to terminate the lease or rental agreement?
All lease agreements have a minimum non-cancellable contract term. If you are uncertain about your future requirements for the leased equipment, please work with your financing sales representative to ensure tailor-made solutions. |
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