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Steve Hansen
What’s the Difference Between Independent Leasing Companies vs. Captive Leasing Companies?
Independent Verses Captive Equipment Leasing Companies – There is a debate about which type of lessor agency is best for the consumer. In reality, the two have very distinct differences that require a detailed review before final decisions are made and monies change hands. Both have some pluses and limitations.

Captive Equipment Leasing Companies
The only purpose of a captive leasing arm of a manufacturer or supplier is to support the primary company’s top-line revenue growth and profit. They only provide financing options for their own company’s equipment and are supportive of the manufacturer’s overall health and profit margins. Equipment is the key to good manufacturing products; that’s how successful companies have managed to offer great services. Check this out to learn more about great manufacturing companies.
As part of the ongoing sales process, these leasing companies are contacted once a client has already negotiated his or her own “best deal” and requested terms on the purchase. As in any basic lease, one of the best-selling features of the sales process is presenting a monthly payment number that makes sense to the buyer and one attractive enough for them to sign off on and have the equipment delivered. All of this is documented in the monthly stat report of the sales made for a given time, cataloging which helps in calculating the profits and losses. One can understand the importance of Sales Statistics that Reveal How Great Teams Sell as Salesforce has expounded the concept in a perspicuous manner.
How Captive Leasing Works
- A “what will the market bare” rate mentality exists as a prospect is turned into a buyer?
- Creditworthiness becomes a factor in determining the final pricing offered to the client and is often used as leverage to increase rates or charge additional fees to hedge any ongoing risk.
- Manufacturers extended warranties usually become part of this financial equation and add to the overall cost of the equipment.
- The leasing/finance arm of the company works closely with the sales staff to “get the deal done”
- In this exchange between the two operating divisions of the same company, both are usually required to take responsibility for making the most money possible on the transaction and showing an annual profit from their unique operations.
- One positive is that a captive leasing company has an existing sales channel in place to take equipment back and resell it. However, this is only a bonus to the lessor since they rarely want the equipment back and would prefer the client just continue their payments.
Independent Equipment Leasing Companies
Just like any client advocate, a good independent equipment leasing company has only the buyer’s interests in mind. Therefore, all communication is about providing the best financial deal possible and the buyer with the capital they need to negotiate their own sales price.
Benefits of Working with an Independent Leasing Company
- By definition, an independent leasing firm is exactly that, independent. They focus exclusively on the financial transaction and making sure the client has the capital they need to buy their equipment.
- Armed with the knowledge that they will be able to fund any of their immediate equipment needs, they are then in charge of negotiating to obtain the best pricing possible, a reduction in shipping costs, free extended warranties, and anything else a salesman can offer for a “cash deal.”
- With the security that comes from independent financing, a savvy business owner can involve several competing vendors in bidding for his / her business. This usually results in a more competitive quote and lower overall costs to acquire the equipment.
- Since an independent leasing firm is only concerned about the client, an improved capital lease can usually be structured on behalf of the business, thus setting the stage for additional equipment needs and funding down the road.
- The cost of the lease is usually a bit higher than that of a captive firm, but savings come from custom-tailored lease terms and acquisition savings on equipment, warranties, and installation or training costs.
- Independent firms are structured to move quickly and make funds available immediately, often within 24-48 hours. They can be in motion.
Make the Right Choice with Equipment Leases!
In the final analysis, each business looking for equipment financing needs to look at its circumstances and determine which type of lease makes the most sense for its organization. Our experience has told us that both kinds of firms offer unique pros and cons to any transaction. The independent route, however, usually provides the most flexibility in the long run since they are standing on the same side of the transaction with the client, as compared to a captive agency that is, without question, standing on the seller’s side.