Interim Rent On An Equipment Lease

You have leased some equipment for your business. You are looking over the paperwork when you notice a charge labeled “interim rent.” What does this mean?

An Example of Interim Rent

Your monthly payments on your leased equipment are $1,020 due on the 15th of each month. However, you actually took delivery of your equipment on the 12th. Therefore you have had use of the equipment for three extra days, and this is what you are being charged for. In this case, the additional charge would be $102 ($1,020 multiplied by 3/30).

Is Interim Rent Justified?

Probably no one minds paying for a few extra days. However, in rare cases, some companies abuse their customers in order to create higher interim rental payments. For instance, you might sign a lease with quarterly payments, and be charged an extra month or more in interim rent.

Progress Payments

As an example of progress payments, let’s consider the ordering of expensive customized packaging equipment which can take six months to deliver. The packaging equipment seller will begin building your customized system and, because the seller will not be able to sell your system to someone else if they don’t get paid, they will ask for progress payments at certain points. Possibly, twenty percent to get started, another twenty percent in ninety days, etc.

When Interim Charges are Legitimate

In the above-referenced example, the leasing company has made an unsecured loan to your equipment seller. This situation is risky for the leasing company because a problem could arise to unwind the deal, such as your loss of the big customer you needed that new system for. To lessen the risk the leasing company will legitimately bill you for interim charges.

To avoid problems with interim rental fees, examine your lease agreement carefully before signing it. If you have questions, your leasing company should be open to answering them in a straightforward fashion. Biz Com Loans will take care of your equipment financing needs and make sure that you understand what you are committing yourself to.

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