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New York Times News Story Stirs Up Leasing Industry (This was sent out yesterday to all on the Leasing News Let the Renter of Equipment Beware http://www.nytimes.com/2004/08/12/business/12sbiz.html?pagewanted=all --- from Michael Fleming, President of the Equipment Leasing Association: Letter to the Editor: “In Equipment Leasing Deals, Let the Renter Beware” (August 12, 2004). Dear Mr. Feyer, I would like to clarify a few points in the article “In Equipment Leasing Deals, Let the Renter Beware” (August 12, 2004). The article is misleading as it implies that so called “access fees” -- more commonly referred to as application or commitment fees -- are unusual. The article also suggests that such fees should always be fully refundable. Whether a home mortgage, line of credit or an equipment lease, the application or commitment fee document should clearly spell out the responsibilities of the parties, including conditions such as refundability. In most financial businesses it is common for credit application fees or commitment fees to be part of the financing transaction. Similar to loan application fees when applying for a mortgage, lessees pay a commitment fee to a lessor. These fees pay for the research and due diligence before credit is extended. As standard practice, commitment fees aren't refunded if the lease deal does not go through because the organization needs to defray costs for work already conducted. Every day 30,000 to 40,000 leases are written for hundreds of thousands of companies from small bakeries to multi-national companies in the U.S. The overwhelming number of these transactions proceed routinely as reflected by an industry-wide delinquency rate of less than 2 percent.* The industry, as a whole, produced between $100 billion and $300 billion additional real GDP, produced between $227 billion and $229 billion additional real equipment investment, and created between three million and five million additional jobs between 1997-2002.** But, the most important contribution of the equipment leasing industry lies in providing access to capital. If leasing were unavailable many entities, from non-profit to private organizations, from tax-exempt entities to public companies, would not be able to acquire the equipment they need. Michael Fleming President Equipment Leasing Association *The Equipment Leasing Association's (ELA) 2002 Survey of Industry Activity (SIA) report. **The Economic Contribution of the Equipment Leasing Industry to the U.S. Economy, a study conducted by Global Insight, a global economic and financial forecasting company, August 2003. --- A spokesperson for CapitalWerks stated that Jim Raeder was on a flight to New York City to meet with the New York Times about the article. One wag said he was going there to “punch the editor in the nose.” Allegedly the story was inaccurate, the information supplied to the writer was different than reported, and he wanted to confront the writers and editors regarding the story, which was “false,” according to the spokesperson for CapitalWerks. He has taken the first plane to New York to confront them in person. Mark McQuitty was not available for a comment. The president of Alliance Funding Group stated the information was incorrect and their attorney was “handling the matter.” The company processes 1200 leases a month. All monies are returned that are not earned. He did not want to be mentioned, including his name. A statement was requested, but not received a press time. Leasing News has received complaints about both companies, but all have been resolved, meaning money returned or leases funded. It is not uncommon to get into a dispute, and the point here, all complaints to Leasing News were resolved by both parties to both parties satisfication. It was also brought to our attention that neither of the companies mentioned in the article are members of the Equipment Leasing Association. In the article, it may be inferred that they are. Leasing News has settled over 500 “disputes” in the last four years regarding advance rentals, plus has published “legitimate” complaints on its Complaint Bulletin Board, plus has sponsored an agreement regarding keeping fees, such as advance rentals. Please go here for the agreement: http://www.leasingnews.org/Conscious-Top%20Stories/Greene_Lease_agreement.htm To learn more about advance rentals, please read attorney Ken Greene's most recent newsletter on the subject: |
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