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Using Lease Rate Factors


A lease "rate factor" is used to convert a cash purchase price into an equivalent monthly lease payment OR to convert a monthly lease payment into the equivalent cash funding amount*. They are called RATE FACTORS because they bundle the interest RATE, lease term, and other details (e.g., end-of-term purchase option) into a single FACTOR. They work as follows:

Cash Purchase Price x LEASE RATE FACTOR = Monthly Lease Payment

or

Monthly Lease Payment / LEASE RATE FACTOR = Cash Funding Amount



To calculate a monthly lease payment:

  1. Determine the total retail cash purchase price.
    This is the amount the merchant would pay if he elected to purchase the ATM in cash (i.e., a single lump-sum payment) and includes the equipment, freight, and installation.

  2. Determine the merchant's desired lease term and purchase option.
    The merchant may select a 12, 24, 36, 48, or 60 -month lease term and may choose an end-of-term purchase option of either $1.00 or 10%. The purchase option is the amount for which the merchant may purchase the ATM at the end of the lease term.

  3. Determine the appropriate lease rate factor.
    On the ATM Lease Rate Factors page, locate the lease rate factor within the applicable retail cash purchase price range that corresponds to the merchant's desired lease term and purchase option.

  4. Multiply the retail cash purchase price times the lease rate factor.
    Multiply the retail cash purchase price from step #1 times the lease rate factor from step #3; the result is the MONTHLY LEASE PAYMENT.

Examples

  1. You quote Merchant A a total retail cash purchase price of $9,500.00, which includes the Triton 9600 ATM, freight, and installation. Merchant A would prefer to lease the machine on a 60-month term with an option to purchase it for $1.00 at the end of the lease.

    Calculation:

    • Step #1   Total retail cash purchase price is $9,500.00
    • Step #2   Lease term is 60 months and purchase option is $1.00
    • Step #3   Lease rate factor in the $5,001-$15,000 range corresponding to 60 months and $1.00 purchase option is .02390
    • Step #4   $9,500.00 x .02390 = $227.05
    • MONTHLY LEASE PAYMENT is $227.05

  2. You quote Merchant B a total retail cash purchase price of $11,000.00, which includes the Diebold CashSource Plus 200 ATM, freight, and installation. Merchant B would prefer to lease the machine on a 48-month term with an option to purchase it for 10% (10% of the retail cash purchase price, $11,000.00 x 10% = $1,100.00) at the end of the lease.

    Calculation:

    • Step #1   Total retail cash purchase price is $11,000.00
    • Step #2   Lease term is 48 months and purchase option is 10%
    • Step #3   Lease rate factor in the $5,001-$15,000 range corresponding to 48 months and 10% purchase option is .02916
    • Step #4   $11,000.00 x .02916 = $320.76
    • MONTHLY LEASE PAYMENT is $320.76



To calculate the cash funding amount:

  1. Determine the monthly lease payment.
    This is the monthly amount you quote the merchant for the ATM and includes the equipment, freight, and installation.

  2. Determine the lease term and purchase option.
    You may offer a 12, 24, 36, 48, or 60 -month lease term and an end-of-term purchase option of either $1.00 or 10%. The purchase option is the amount for which the merchant may purchase the ATM at the end of the lease term.

  3. Determine the appropriate lease rate factor.
    On the ATM Lease Rate Factors page, locate the lease rate factor within the applicable cash funding amount range that corresponds to the lease term and purchase option.

  4. Divide the monthly lease payment by the lease rate factor.
    Divide the monthly lease payment from step #1 by the lease rate factor from step #3; the result is the CASH FUNDING AMOUNT.

Examples

  1. You quote Merchant A a monthly lease payment of $199.00 for a 60-month lease with an end-of-term purchase option of $1.00, which includes the Triton 9600 ATM, freight, and installation.

    Calculation:

    • Step #1   Monthly lease payment is $199.00
    • Step #2   Lease term is 60 months and purchase option is $1.00
    • Step #3   Lease rate factor in the $5,001-$15,000 range corresponding to 60 months and $1.00 purchase option is .02390
    • Step #4   $199.00 / .02390 = $8,326.36
    • CASH FUNDING AMOUNT is $8,326.36

  2. You quote Merchant B a monthly lease payment of $250.00 for a 60-month lease with an end-of-term purchase option of 10% (10% of the cash funding amount), which includes the Diebold CashSource Plus 200 ATM, freight, and installation.

    Calculation:

    • Step #1   Monthly lease payment is $250.00
    • Step #2   Lease term is 60 months and purchase option is 10%
    • Step #3   Lease rate factor in the $5,001-$15,000 range corresponding to 60 months and 10% purchase option is .02330
    • Step #4   $250.00 / .02330 = $10,729.61
    • CASH FUNDING AMOUNT is $10,729.61
*Cash Funding Amount: the cash funding amount is the total amount the leasing company will pay for the equipment lease; distributor cost for equipment, freight, and installation are then subtracted from this amount to arrive at distributor commission/profit.



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