Leasing

TYPES OF LEASES
Financial lease Operating lease Sale & lease back Direct leasing Single investor lease Leveraged lease Straight lease & modified lease Primary & secondary lease Vendor lease Wet lease & dry lease Domestic & international lease

 Financial or Capital lease

Long term Recovery of capital outlay + required ROR Non cancellable Upkeep & maintenance by lessee Condition to transfer the title at the end

Operating lease or Service lease

Short term Cancellable Upkeep & maintenance by lessor Doesnt recover the cost of the asset Option to renew or to lease to third party

 Sale & lease back

Lessee 1st purchases and then sells to lessor Lessor leases out to the same lessee Satisfaction regarding quality Release lump sum cash (old asset) Tax credit of dep to lessor

Direct leasing
Direct from lessor to lessee Equipment supplier = lessor

 Single investor lease

Agreement bet lessor and lessee only Finance by equity or debt Recovery from lessor only Rentals to lessor only

Leveraged lease
Lender or lease financer Separate agreement bet lessor and financer Major part is financed by lease financer

 Straight lease & modified lease

Straight- cannot be modified(tenure, rental) Modified- modifiable (tenure, rental)

Primary & secondary lease

Primary (front ended)- initial period (1-5 yrs) Recovery in initial period Heavy rental Secondary (back ended)- (5-8 yrs) After recovery Low rental

 Vendor lease
Lease financer and vendor tie up Loan provision to purchase asset For expensive products Comm to financer & interest to cust

Wet lease & dry lease

Wet lease Expenses by lessor Rental to cover expenses Dry lease- Expenses by lessee Control with lesee

 Domestic & international lease

Domestic- resident of same country International-from two different countries
Import lease: lessor and lessee from same country & equipment supplier form dif country Cross border lease: lessor and lessee from diff country & domicile of equipment supplier is immaterial

THANK YOU