Category: Lease Advice

A lessor did a transaction in which the lessee presented postdated cheques, bank statements, staff ID card, house address and pro-forma invoice, as part of the requirements for the lease. The lessor only realised that the information given by the lessee were false after the transaction went bad. This true story remains a reoccurring decimal in the industry facilitated by weak risk assessment. Risks analysis is essential to the business of leasing- involving a thorough analysis of both the…

Read More

–Competitive Advantage – this takes a number of forms e.g. size, funding sources speedy process. –Specialisation – creating a niche, focusing on specific product or market segment, transaction size, equipment type, industry or geographical area. –Customer service and flexibility – good relationship. Flexibility in product offering and responsiveness of the lessor. –Funding Ability – for long term sustainability and viability –Controlled back-office costs – a lower back office cost enhance profitability. –Highly-trained workforce – profitability will suffer with inadequate…

Read More

It is important for the lessor (owner of asset) to identify objections that may come your way as you prospect for business. Some of the most common objections include: Leasing is more expensive The entity wants to acquire through cash Leasing is complex The entity believes in ownership Non cancelable leases are a concern The entity is seeking tax benefits The following suggestions could help in addressing the concerns of the lessee Leasing is more expensive; assuming purchase is…

Read More

Residual value analysis is a comprehensive process aimed at determining the future value of equipment at specified times during the lease term and at expiration. The issue of residual value is very crucial in leasing. In operating lease for example, the lessor is more likely to rely upon the future value of the leased asset for its profit as the lessee’s ability to pay the lease rental. However, care must be taken in assessing the residual value. For instance,…

Read More

As a lessee, it is important to understand that leasing can help you acquire any type of asset you desire. Any asset, cutting across the various sectors of the economy can be gotten through leasing. Whether you desire assets for business or comfort can be acquired through leasing with ease, convenience and flexible payment pattern. See some various aspects: ¨ Transportation equipment including vehicles, trucks, tractors, heavy duty vehicles, Garbage trucks, Tankers, Trailers, Buses etc ¨ Agriculture equipment including Ploughing machine,…

Read More

In leasing, a key activity that must not be taken lightly is how to value your residuals. (Residual value is the value of the leased asset at the end of the lease transaction). Residual value analysis is a comprehensive process aimed at determining the future value of equipment at specified times during the lease term and at expiration. The issue of residual value is very crucial in leasing. In operating lease (this is lease whose intention is not to…

Read More

Players in the leasing industry has been facing the challenge of funding for lease transactions for over the years. Despite the fact that leasing has been contributing greatly to the Nigerian economy and creating wealth, there still exists this challenge. This particular challenge has hindered its capacity to effectively participate in big-ticket leases, thereby limiting players in the domestic leasing terrain to the provision of supporting equipment such as vehicles, generators, computers, air-conditions etc, while reducing its capacity to…

Read More

A lessor (owner of asset) can take a number of the rentals at the beginning of the lease and the others taken in arrears e.g. in a 12 month lease, the lessor can take 2 month rentals in advance and the remaining 10 rentals in arrears. One of the implications of this is that, the lease ends at month 10 thus mitigating the risks of running for the entire 12 months. Also, the yield in the transaction will increase…

Read More

As a lessor (the owner of the asset), leasing business can be sourced through the  following are the ways: By direct marketing of the Lessor’s services; the Lessor can approach a potential Lessee (the customer that needs the asset) for business; The Lessee initiating the approach to a Lessor for lease facility; Through sales-aid leasing whereby the supplier of equipment makes initial enquiries, and Through financial intermediaries e.g. brokers, consultants  acting on behalf of either the Lessor (owner of…

Read More

There are some factors and variables, both qualitative and quantitative, that affects a person or firm’s decision either to buy or lease an asset. It is imperative as a lessee (user of an asset) to critically analyse these issues to arrive at a better decision. The following are some of the qualitative factors that imply an obvious advantage of leasing over buying an asset. (1)       Flexibility and convenience:  due to the nature of leasing, lessors (owner of an asset)…

Read More