FREQUENTLY ASKED QUESTIONS
- Why does Mesa Leasing require a homeowner in every transaction?
- If the applicant is not a homeowner, can we use a cosigner to meet this requirement?
- Does Mesa Leasing place a lien on the home of the homeowner or guarantor?
- Is there a limit as to where Mesa Leasing will write contracts(defined territory)?
- What are the options if the applicant has open liens or judgments?
- Does every application require additional collateral?
- How much additional collateral does the applicant need?
- Why so much for an EFA?
- Who is responsible for providing the value of the additional collateral?
- Will Mesa Leasing accept titled vehicles as additional collateral?
- . Can we use Real Estate as collateral?
- How do I calculate the available equity if real estate is used?
- How do I calculate a “loan-to-value” ratio?
- Are there any extra costs when using real estate as collateral?
- Will Mesa Leasing consider an application where the applicant has had a bankruptcy?
- Will Mesa Leasing approve a start up restaurant?
- Why do I need to provide bank statements, I have a bank rating?
- What is Mesa Leasing’s “application only” limit before a full financial package is required?
- What constitutes a “full financial package”?
- Does Mesa Leasing offer Equipment Finance Agreements (EFA)?
- What is an EZ-EFA?
- Does Mesa Leasing write $1 buy out leases?
- Does Mesa Leasing offer FMV buy out leases?
- What is the maximum term for which Mesa Leasing will write a contract?
- Does Mesa Leasing write “sale-leaseback” agreements?
- What items does Mesa Leasing require when submitting an application?
- Must my applicant provide a personal guarantee?
- What are the limits of what Mesa Leasing will finance?
- What’s the interest rate? How do I sell it?
- Why do I need to supply pictures of the equipment purchased and additional collateral?
- OK, I’ve sent all the signed documents. When can I expect the transaction to fund?
- What kind of insurance does Mesa Leasing require on the equipment?
- Would Mesa Leasing consider e-mailing documents to the client or me?
- Do you need copies of driver’s licenses?
- What documents need to be notarized for Mesa Leasing?
- What does Mesa Leasing collect upfront when starting a lease or EFA?
- Is the broker allowed to have the initial check made out to them rather than Mesa Leasing?
- Does Mesa Leasing discount?
- Is there a cost for a cashier’s check or wire transfer?
- Is there a limit to how many points a Broker may build into a transaction?
- What is the difference between BUY rate and SELL rate?
- What tends to cause most delays after the applicant has signed the documents?
- Is there an “early payoff” penalty?
- How does Mesa Leasing calculate a payoff?
- Is there any particular type of equipment that Mesa Leasing does not like?
- What fees does Mesa Leasing charge?
- Does Mesa Leasing take credit cards?
- Does Mesa Leasing take payments over the phone?
- Does Mesa Leasing accept payments via ACH?
- Does Mesa Leasing have a grace period on payments?
- Does Mesa Leasing charge a late fee for payments?
- Does Mesa Leasing charge interim rent?
- Does Mesa Leasing report to the credit agencies like Experian, Trans Union, and Equifax?
- Why does Mesa Leasing require copies of any DMV work for titled vehicles & trailers from my vendor before funding the transaction?
- Why is the client required to return the original titles to Mesa Leasing when signing documents?
- Should my client sign the title before returning? Where?
- Why is a verbal Delivery & Acceptance (D&A) required for every signer?
1. Why does Mesa Leasing require a homeowner in every transaction?
Home ownership indicates stability. Mesa Leasing needs to be able to find the applicant should the transaction ever default. If the applicant is a renter, they could simply move to another location and we would be unable to find them or our equipment.
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2. If the applicant is not a homeowner, can we use a cosigner to meet this requirement?
Yes! The primary purpose of the homeowner is to help us find our equipment. Access to the cosigner accomplishes the same thing. However, it must be made clear to the cosigner that if they fail or are unable to assist us in the recovery of our collateral, they may wind up having to make the payments themselves
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3. Does Mesa Leasing place a lien on the home of the homeowner or guarantor?
No! Only in those cases where the applicant is offering his property as additional collateral do we actually place a lien on it.
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4. Is there a limit as to where Mesa Leasing will write contracts(defined territory)?Mesa Leasing only writes contracts nationwide.
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5. What are the options if the applicant has open liens or judgments?
Because a tax lien gives the government first position on any collateral, Mesa Leasing can only consider these transactions as EFA’s, and then only if we are able to pay off the liens out of the proceeds of the EFA.
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6. Does every application require additional collateral?
No! With our new EZ-Lease Program we can finance 10-50k with no additional collateral. For anything else Yes! Why? Because in dealing with sub-prime credits default risk is high. We use additional collateral to increase our chances of getting our money back if the deal "went south" the day after we funded it.
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7. How much additional collateral does the applicant need?
We need anywhere from 100% of the principal amount when writing a lease; to as much as 250% when writing an EFA.
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When we write a lease, we can consider the value of the equipment in the calculation for default. In an EFA, there is often no equipment being purchased, so we need more for an EFA approval.
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9. Who is responsible for providing the value of the additional collateral?
While we have access to several good web sites and other sources for determining the value of construction equipment, titled vehicles, and some other types of equipment, we can’t always locate satisfactory value information. Therefore, the Broker working with the client is responsible for providing acceptable value documentation to us. The best source for this information is often the client since they purchased the equipment and can identify the best places to look. Also, keep in mind that we are looking for auction values – not retail values.
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10. Will Mesa Leasing accept titled vehicles as additional collateral?
All the time! Cars, trucks, trailers, boats, and even RVs are all acceptable forms of collateral (no aircraft, please). There are some good web sites like www.boats.com/nada/nada.jsp, www.kbb.com, and www.rvtrader.com/ for finding the value of these items. In this category, we want wholesale, not retail or private party sale values.
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11. Can we use Real Estate as collateral?
Real Estate is an excellent source of additional collateral. It allows us to offer terms beyond a 36 month contract to as long as 60 months.
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12. How do I calculate the available equity if real estate is used?
Mesa Leasing will loan up to a maximum of 75% of the appraised value of property with a home or building on it. The maximum we will loan on land or vacant property is 60% of the appraised value. These percentages include the cost of the equipment we will finance.
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13. How do I calculate a “loan-to-value” ratio?
Add up all the open liens on the property and divide it by the appraised value. As an example, if someone has a 1st trust deed of $365,000 and a 2nd trust deed of $75,000, and the house has been appraised for $800,000, then the current loan to value is said to be 55% ($365,000 + $75,000 = $440,000…. $440,000/ $800,000 = 55%). If the application is for $100,000, then the new total loan to value ratio would be 67.5% ($440,000 + $100,000 / $800,000 = 67.5%) - enough to qualify.
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14. Are there any extra costs when using real estate as collateral?
Mesa Leasing requires a recent appraisal (within the past 6 to 12 months) and title insurance when using real estate. If no current appraisal is available, one can be ordered and paid for at the door by the client. The cost is about $350 for personal property. (Commercial appraisals are quoted on a job-by-job basis). The cost for title insurance is $550 and is collected upfront when the client accepts the approval. We need a check for $800 to cover the cost of title insurance and docs and is non-refundable should the client change their minds.
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15. Will Mesa Leasing consider an application where the applicant has had a bankruptcy?
All the time! We do look to make sure the bankruptcy has been discharged and that the applicant has reestablished some credit. If we’re the only new credit, chances of success diminish greatly.
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16. Will Mesa Leasing approve a start up restaurant?
Mesa Leasing has approved many applications for start up restaurants; however, the collateral being offered must be from outside the business. We must look for outside collateral as the equipment typically purchased for a restaurant has very little resale value.
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17. Why do I need to provide bank statements, I have a bank rating?
When we get copies of the last three months of bank statements, we can easily verify several things including balances, cash flow (deposits) and correct legal names; we can also spot trends. Sometimes we may ask to see six months if it’s a tough deal.
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18. What is Mesa Leasing’s “application only” limit before a full financial package is required?
Mesa Leasing will consider applications up to $75,000 without the need for a full financial package. That does not mean we may not ask for one if we feel it’s needed.
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19. What constitutes a “full financial package”?
When we ask for a full financial package, we’re asking for two years of personal tax returns including all Schedule Cs. We want copies for everyone providing a personal guarantee. We also need a Personal Financial Statement for each principal or guarantor. We then need two years of tax returns on the company if it’s a corporation. The tax returns need to be complete with no missing pages. Also, if the tax returns are more than six months old, we will require an interim statement for the company (both P&L and Balance Sheets).
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20. Does Mesa Leasing offer Equipment Finance Agreements (EFA)?
Yes! As an alternative solution to your applicant’s need, we may suggest an EFA. The EFA is used when other liens on currently owned equipment need to be paid off to give us first position on it as collateral. It also works where the applicant needs to free up working capital from equipment equity. And, finally, the EFA structure avoids the more cumbersome process of a “sale-leaseback” transaction. Also note that when working capital is the ultimate goal, we require information as to the intended use of the proceeds.
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An EZ-EFA is the same aas a regular EFA except it requires no initial payment. The only upfront cost is a $250 doc fee. Keep in mind that the payments are slightly higher than the normal EFA because payments are now collected in arrears.
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22. Does Mesa Leasing write $1 buy out leases?
We no longer write $1 buyout leases. Instead we write standard term leases for 12, 24, 36, 48, and 60 months but treat the last three months payments as the payoff. In the case of a 36 month contract, we would write a lease for 33 months with a payoff equal to three more payments for a total of 36.
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23. Does Mesa Leasing offer FMV buy out leases?
No. All leases have the three month pay off clause. You can, however, write a 36 month lease with three additional payments as purchase for a total of 39 to reduce the monthly payment.
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24. What is the maximum term for which Mesa Leasing will write a contract?
Ninety per cent (90%) of the leases and EFAs that we write are for a term of 36 months. We will consider going out to 48 months if the equipment is new AND the collateral is good. Also, If the applicant is willing to use real estate to secure the lease, we will offer terms up to 60 months.
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25. Does Mesa Leasing write “sale-leaseback” agreements?
Yes and No. We write EFA contracts, which are essentially the same thing.
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26. What items does Mesa Leasing require when submitting an application?
Mesa Leasing provides every Broker with an application checklist. The checklist & the instructions are designed to walk you through a list of items we need. The more successful Brokers we work with take the time to complete the checklist and include it with a write up.
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27. Must my applicant provide a personal guarantee?
Every application we approve requires a personal guarantee – no exceptions.
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28. What are the limits of what Mesa Leasing will finance?
Mesa Leasing accepts applications from $10,000 to as much as $200,000.
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29. What’s the interest rate? How do I sell it?
You don’t! The successful Brokers we work with don’t sell an interest rate. Part of the checklist is to determine why the applicant wants the equipment. The answer must include how much revenue the applicant will generate through the use of the equipment being purchased. Only by comparing the payment with how much they will generate will you be able to successfully close. When someone plans to generate $15,000 a month, there is no real difference between a payment of $2,000 and $1,500. On the other hand, if the equipment is not income producing, there is no effective close.
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30. Why do I need to supply pictures of the equipment purchased and additional collateral?
Pictures help us determine the value of the equipment. They also help us to identify it later on if it becomes necessary to go out and collect our collateral.
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31. OK, I’ve sent all the signed documents. When can I expect the transaction to fund?
Several more items need to be accomplished before we can fund. We require a certificate of insurance from the client’s insurance agent. Getting this sometimes creates delays if the client hasn’t faxed the documents having to do with insurance to his agent promptly. Our Office Manager will review with you any missing items which might include a check for the first payment or security deposit, original titles to the collateral, documents missing signatures or initials, failure to have the signatures witnessed by a third party, etc. Once everything has been received, including a recorded deed of trust if real estate is used, we will perform a verbal D&A with each signatory on the contract. It is imperative that your applicants understand this.
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32. What kind of insurance does Mesa Leasing require on the equipment?
If the equipment is being leased, we will require Mesa Leasing be added to their policy as an additional insured for liability and as Loss Payee for that specific piece of equipment. For equipment being used as additional collateral, we only require that Mesa Leasing be the Loss Payee. If the contract being written is an EFA, Mesa Leasing only requires we be the Loss Payee as we are the lien holder and not owner of the equipment.
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33. Would Mesa Leasing consider e-mailing documents to the client or me?
The internet is becoming an integral part of our business. Sending documents overnight just isn’t fast enough in some cases. Mesa Leasing has emailed documents to Brokers (and applicants) but prefers not to. Why? Because when we send documents overnight, we can identify for you and the client where they need to sign or initial each document. We find that often when documents are emailed, some of these signatures or initials are missed. However, we’ll work with you on providing the best solution for your client.
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34. Do you need copies of driver’s licenses?
Yes! We suggest that the copy you make be 150% the size of the original and that the signature and picture of the individual be clear and legible. If not, this will hold up funding until a clear copy is received.
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35. What documents need to be notarized for Mesa Leasing?
The only document that requires a signature be notarized is a Deed of Trust when using real estate as collateral. But, we do require that the copy of the driver’s license that is provided be legible. We do compare the signature on it with that on our documents.
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36. What does Mesa Leasing collect upfront when starting a lease or EFA?
Mesa Leasing collects the first payment, a security deposit equal to one month’s payment, a documentation fee of $250, and any other fees that may apply. (For a list of fees, see question #46) If no fees are due at the end of the lease, the security deposit may be used for a final payment.
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37. Is the broker allowed to have the initial check made out to them rather than Mesa Leasing?
We prefer the initial check be made out to Mesa Leasing. However, if you have collected a check as a commitment fee, we require that you provide us with a copy of the check and advise if a portion or all is to be applied to the upfront costs collected by Mesa Leasing. It will then be credited towards any commissions due your company.
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38. Does Mesa Leasing discount?
No!
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39. Is there a cost for a cashier’s check or wire transfer?
Mesa Leasing charges $75 for each certified check or wire transfer.
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40. Is there a limit to how many points a Broker may build into a transaction?
The limit is ten points. Also, on applications that exceed $100,000, Mesa Leasing will pay the Broker up to $10,000 at the time of funding and the balance due to the Broker after the client has made six payments.
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41. What is the difference between BUY rate and SELL rate?
The BUY rate is that rate published on our rate sheets for Leases and EFA’s. A SELL rate is that rate you use to determine the payment after adding in the number of points you have decided. As an example, if our BUY rate is 0.0432, and you wanted to make 10 points, the SELL rate would be 0.04752 (0.0432 x 1.1).
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42. What tends to cause most delays after the applicant has signed the documents?
Insurance agents tend to cause the most delays. It is imperative your client contact his agent and make them aware of the importance in providing us with the certificate of insurance – and have the correct insurance. We have also lost opportunities because the applicants were unwilling to provide liability or loss protection when needed.
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43. Is there an “early payoff” penalty?
As we tell every client when we do the verbal D&A, although the contract cannot be cancelled, it may be paid off early. In both a lease as well as an EFA, the payoff is treated the same.
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44. How does Mesa Leasing calculate a payoff?
Early payoffs are based on the number of remaining payments. Clients are often confused as to why after having made 12 payments in a 36 month contract, the payoff is just about what the equipment cost. Our payoff is based on the remaining payment stream calculated at a discount rate of 9%.
As an example: Client leases a piece of equipment that costs $100,000 out the door. You add 10 points to a 36 month contract. His payments are $4,752 a month. The client makes 12 payments. What’s the payoff? If you came up with $104,017 (or thereabouts), you understand how to calculate a payoff.
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45. Is there any particular type of equipment that Mesa Leasing does not like?
Mesa Leasing has provided finance options for tanning salons, restaurants, over-the-road truckers, and exercise equipment. It’s not about the equipment. It’s about the risk. We look at the additional collateral as the final solution. As previously mentioned, it’s a question of getting out whole!
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46. What fees does Mesa Leasing charge?
Here is a sample of some of the fees Mesa Leasing will charge:
Standard Doc Fee - $250.00
Cashier’s Check - $75.00
Wire Transfer - $75.00
DMV fee- $25.00
(per title handled by Mesa Leasing)
Title Insurance - $550.00
(collected upon acceptance of terms & before processing)
Appraisal - $300.00
(Personal property – collected at the door. Estimated Commercial property – quoted on a job-by-job basis)
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47. Does Mesa Leasing take credit cards?
No! Mesa Leasing is unable to process any payments by credit card.
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48. Does Mesa Leasing take payments over the phone?
Mesa Leasing is able to accept payments if the client were to fax us a check. The check would be made out to us for the amount desired and then faxed to Mesa Leasing at 858-541-1006. They can then void the check. We will issue a draft check to replace that check and deposit it. This option eliminates the need to overnight payments.
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49. Does Mesa Leasing accept payments via ACH?
Yes, but the value of payments via ACH is over rated. If there is no money in the account, there’s no sense in trying to draw from that account. Mesa Leasing sends every client a notice monthly that their payment is due. They then chose to make the payment on time or not. We do make ACH payment available for those clients that wish to do so.
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50. Does Mesa Leasing have a grace period on payments?
We provide the client the opportunity to make the payment with penalty within 10 days of its due day (the 1st or the 15th).
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51. Does Mesa Leasing charge a late fee for payments?
Any payment received after 10 days incurs a late fee equal to 10% of the monthly payment, and an additional $100 late fee if more than 30 days late.
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52. Does Mesa Leasing charge interim rent?
No.
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53. Does Mesa Leasing report to the credit agencies like Experian, Trans Union, and Equifax?
Mesa Leasing does not report to credit agencies unless the agreement goes into default.
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54. Why does Mesa Leasing require copies of any DMV work for titled vehicles & trailers from my vendor before funding the transaction?
We require copies of the DMV paperwork to insure Mesa Leasing is being added correctly to the title (Either as Lessor or Lien holder)
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55. Why is the client required to return the original titles to Mesa Leasing when signing documents?
Mesa Leasing needs the titles so we may add our name as the lien holder on the vehicle.
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56. Should my client sign the title before returning? Where?
The owner(s) of the titled vehicle should be instructed to sign on line #2 on the bottom of the lease – and only there.
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57. Why is a verbal Delivery & Acceptance (D&A) required for every signer?
Yes. In addition to confirming the commitment of each individual, it gives us an opportunity to confirm the terms of the contract and verify the phone numbers we have on file for each person.
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Mesa Leasing Is a Licensed California Finance Lender - Our License Number Is #603 A437