A Master Lease is a program which is simple to set up yet yields big benefits to the borrower. A customer which plans to make several equipment purchases throughout the year will benefit by having them approved under one Master Lease as opposed to taking out separate individual leases for each one.
A client can be approved for a minimum $100K Master Lease at a low rate. Then the borrower can finance equipment against that line at a fixed approved rate until you reach your approved maximum. Typically, the borrower will have one year to use up the Master Lease. If you use it up in the first 3 months then the rate is exactly as quoted; if you use it in months 4-12 then the rate is adjusted per a calculated index but it will always be lower than if you took out individual finances.
For example, you may need several of pieces of equipment but not all right away. You go through the credit review process and are approved for a Master Lease for $150K at 6% rate. You buy 3 pieces of equipment each at $50K in the first 3 month period and all purchases will be at the approved 6% rate. If you buy equipment in months 4-12 then the rate will adjust.
The clear benefits of the Master Lease is that you go through the underwriting process once; you are approved at a lower finance rate and you can negotiate a discount with your vendor once you inform them that you’re ready to go since you have a finance line approved. It will also allow you to plan your capital expenses way ahead of time.