Leasing MarketThe professor of the Official University Master's Degree in Integrated Logistics and International Trade , Lorena Quidiello, from Bureau Veritas University Center, talks to us about leasing in this post.
Leasing, also known as financial leasing, is a long-term financing instrument or formula that allows, mainly for professionals, self-employed workers and SMEs, to obtain new investment projects .
What has been the situation of this market in recent years?
On the one hand, in the current economic crisis that we are experiencing, many companies are choosing to use this formula , with the aim of improving their financial situations and alleviating their treasury problems.
On the other hand, it is true that the market for assets that twitter data it finances (for example, investments in machinery and facilities) has shrunk, so the volume of leasing contracts has decreased.
It has been proven that this financing formula has a strong implementation in the most industrialized and developed economies .
The tax advantages that this entails are significant and through this formula companies can access advantageous (long) terms and amounts (for example, 100% financing of the asset) that they would not otherwise be able to obtain.
So, what does this financing instrument consist of?
A financial institution (bank, savings bank, credit institution, etc.) acquires a specific asset (movable or immovable), chosen by the organization, and grants its use in exchange for charging certain fees . These fees include the interest on the financing, VAT and the amortization of the nominal amount.
On the other hand, these fees can be paid, as agreed, at the beginning or at the end of the period in question ; they may be constant or increasing, and they can be settled monthly, half-yearly, or yearly, depending on the frequency that has been set.
Three parties are involved in the operation :
Lessee : has the right to use the property during the duration of the lease.
Lessor : financial entity that acquires the asset in question and transfers it to the lessee.
Supplier : organization that manufactures the good in question that the lessee desires.
At the end of the leasing period, the lessee may return the asset to the financial institution, renew the contract or acquire the asset, that is, exercise the purchase option. In the event that the lessee wishes to exercise the latter option, the organization acquires the asset in question for a low residual value (in its favor).
Another important issue to bear in mind is that the lessee must take out insurance to cover the potential risks to which the property in question is subject. This is required by the corresponding financial institution.