Why would anyone want to own a leasing company? (Why does GE Capital Credit exist?)
A leasing company earns the difference (or spread) between rental income / residuals and the cost of funds. Problems do exist for leasing companies:
- Potential bad credit
- Potential inadequate residuals
- Potential lack of customers
- Potential lack of access to funds
- Potential expensive cost of funds
- Overhead / personnel to handle the complex administration duties
Why do the leasing companies keep leasing? The answer is simple: They make a lot of money.
What if you owned your own leasing company and rented only to yourself? This is called a “captive leasing company”. You could keep the profit currently made by the GE Capital Credit, et al, on your money, without the potential problems they face. This is what R. Nelson Nash talks about in his book, Becoming Your Own Banker (see my Issue #11, May 2009) Nash’s “Infinite Banking Concept” tells you how you can retain the profit currently being made by banks and finance companies from the money you currently pay them. Additionally, structured properly, your captive leasing company can offer some tax savings as well as lawsuit protection.
Covenant Leasing Services, Inc. (www.covenantls.com) of Elmhurst, Illinois, can help you structure your catpive leasing company properly as well as handle all the administrative responsibilities so you as the owner only have to pick out the corporate name, fund the company, and select your equipment. Every transaction, including incorporation, is handled by CLS, a total “turn-key” operation.
When is it right for you to consider setting up your captive leasing company? Covenant Leasing Services, Inc says it make economic sense if you average adding / replacing $40,000 per year of capital equipment.
Don’t miss out on the opportunity to recapture the profit you are currently giving to someone else. Consider your own captive leasing company; call Covenant Leasing Services, Inc at (866) 964-4727. Or call me at 630-778-7646 and I will get you introduced to CLS.
The Wisdom of Henry Hazlitt (1894 – 1993)
A common and long standing economic delusion is that machines create unemployment. This fallacy is often the basis of labor union practices and propaganda, as reflected in hundreds of make-work rules and featherbed practices that perpetuate confusion in the public mind.
Every day each of us is engaged in trying to reduce the effort required to accomplish a given result. Every employer is continuously seeking to achieve results more economically and efficiently — that is, by saving labor.
A manufacturer who buys a machine that can produce a product for half as much labor now has more profits than before. It is precisely out of these extra profits that subsequent social gains are made. The manufacturer will use these extra profits in at least one (if not all) of three ways: (1) Expand operations by buying more machines to make more product, (2) invest in some other industry, or (3) increase his own consumption. Whichever course(s) is taken, employment is increased, whether directly or indirectly.
The reach of benefits continues: Decreased costs of production will begin to drive down product pricing, in turn passing savings along to consumers. Consumers will have money left over to spend on other products and services, and so provide increased employment in other lines.
What machines do is to bring an increase in production and an increase in the standard of living by making goods cheaper for consumers, or by increasing wages because they increase the productivity of the workers.
— Paraphrased From Economics in One Lesson (1946