What is a conditional sales contract?
A conditional sales contract, often called a CSC, finances an equipment purchase over an agreed term. The business takes possession and uses the asset, while legal title is generally retained until the contract's payment and other conditions are met. The signed agreement determines the ownership and security arrangements.
Merrit Capital offers this option alongside equipment leasing. The starting question is practical: do you want a purchase structure for equipment you expect to keep, or do you need to compare the end-of-term options in a lease?
Equipment that may fit a purchase structure
A conditional sale may suit an asset with a long working life and a clear role in the business. Examples include a dump truck used on multiple contracts, an excavator for site preparation, a tow truck joining a fleet, or machinery used in a medical or dental practice.
New and used commercial equipment can be considered. Eligibility depends on the equipment, business, seller, value and lender program. A long expected life does not by itself determine approval or the available term.
Conditional sale or equipment lease?
A conditional sale is structured as a purchase with conditions on title transfer. A lease gives the business the right to use equipment under a rental agreement; any purchase option, renewal or return rights must be stated in that agreement. Some leases are designed around eventual ownership, so the product name alone does not settle the comparison.
Ask for the total cash required at signing, payment schedule, any final payment, fees, payout calculation and the steps needed to obtain clear title. A smaller monthly payment may come with a larger final obligation. See our lease versus finance guide for a side-by-side checklist.
What to prepare for review
- An equipment quote or bill of sale with price, taxes, make, model, year and serial number or VIN where available.
- The seller's details, equipment location, condition and intended delivery date.
- Your Canadian business's legal name, operating history and ownership information.
- A description of how the asset will earn revenue, along with financial information appropriate to the request.
- Your preferred term, available down payment and plans for keeping, replacing or trading the equipment.
Check tax, insurance and payout terms before signing
Confirm who must insure and maintain the equipment, whether any guarantees are required, and what happens if you want to sell or repay early. Have your accountant review the final agreement for sales-tax timing, interest, capital cost allowance and financial reporting. A conditional sales contract should not be chosen on an assumed tax advantage.
For Canadian businesses across the country
Merrit Capital serves Canadian companies only. We work with businesses in Northern and Southern Ontario, Atlantic Canada, Manitoba including Winnipeg, Saskatchewan, Alberta, British Columbia, Quebec, Yukon, the Northwest Territories and Nunavut. We do not offer financing to businesses in the United States. Explore our Canadian service areas.