Unreal Fish Art Blog

Pay Attention to The Prepayment Penalty Written Into an Equipment Lease

Even if you get a great rate, great leverage, and a long lease term, make sure you understand the payout penalties, associated with early retirement of an equipment lease.

If you have no intention to prepay early then this is not a concern.  But the future is hard to predict, and understanding this aspect prior to finalizing a lease is always a good idea.

Many leasing companies make a clever claim that they have no prepayment penalty and that all you have to repay are all the remaining leasing payments.

If this is the case, you can be paying an enormous interest penalty, especially if there are several years remaining at the time you want to pay it out.