What are the participants in a financial lease

Definition of Financial Leasing[edit]FinancialLeasing, also known as EquipmentLeasing or ModernLeasing, is a lease that substantially transfers all or substantially all of the risks and rewards associated with ownership of an asset. Ownership of the asset may or may not ultimately be transferred. Its specific content refers to the lessor according to the lessee on the specific requirements of the leased object and the choice of the supplier, the capital to the supplier to buy the leased object, and leased to the lessee to use, the lessee pays the rent to the lessor in installments, in the lease period of the ownership of the leased object belongs to the lessor all, the lessee has the right to use the leased object. At the end of the lease term, after the rent is paid and the lessee performs all the obligations according to the provisions of the financial lease contract, the ownership of the leased object is transferred to the lessee. Although in the financial leasing transaction, the lessor also has the identity of the equipment purchaser, but the purchase of equipment, such as the choice of supplier, the specific requirements of the equipment, the negotiation of the conditions of the purchase contract by the lessee to enjoy and exercise the substance of the lessee is the substantive purchaser of leased objects. Financial leasing is a new type of financial industry integrating financing and financing, trade and technology renewal. Due to the combination of financing and financing, the leasing company can recover and deal with the leased object when problems arise, thus it is very suitable for SMEs' financing as it does not have high requirements on enterprise creditworthiness and guarantee in financing. In addition, financial leasing is off-balance-sheet financing, which is not reflected in the liability items of the enterprise's financial statements and does not affect the enterprise's creditworthiness. This is very favorable to SMEs in need of multi-channel financing. An essential difference between financial leasing and traditional leasing is that traditional leasing calculates the rent by the time the lessee leases the object, while financial leasing calculates the rent by the time the lessee occupies the financing cost. Is the market economy to a certain stage of development and the emergence of a more adaptable financing methods, is the 1950s in the United States of a new type of transaction, because it adapts to the requirements of modern economic development, so in the 1960s to 1970s quickly developed around the world, and today has become one of the main means of financing for the renewal of enterprise equipment, known as the "Sunrise industry". China in the early 1980s after the introduction of this mode of business, more than two decades has also been rapid development, but compared with the developed countries, the advantages of leasing is still far from being played out, the market potential is very large. The main characteristics of financial leasing[edit paragraph] The main characteristics of financial leasing are: since the ownership of the leased object is only a form of ownership taken by the lessor to control the risk of the lessee to repay the rent, and it may be eventually transferred to the lessee at the end of the contract, the purchase of the leased object is chosen by the lessee, and the repair and maintenance are also taken care of by the lessee, and the lessor only provides financial services. The principle of rent calculation is that the lessor takes the purchase price of the leased object as the basis and calculates the rent according to the time the lessee occupies the lessor's funds and according to the interest rate agreed by both parties. It is essentially a financial transaction dependent on traditional leasing, and is a special financial instrument. Types of financial leasing[edit]1.Simple financial leasingSimple financial leasing refers to the fact that the lessee chooses the leasing object that needs to be purchased, and the lessor leases the leased object to the lessee through the risk assessment of the leasing project. The lessee has no ownership but enjoys the right to use the leased object and is responsible for repairing and maintaining the leased object during the entire leasing period. The lessor is not responsible for the good or bad of the leased object, and depreciation of the equipment is on the lessee's side.2. Leveraged Finance LeasingLeveraged leasing is similar to syndicated loans, and is a kind of finance leasing with tax benefits specializing in large-scale leasing projects, and is mainly led by a leasing company as a backbone company to finance a mega leasing project. First of all, set up a leasing company from the main body of the operating institutions - specifically for the project set up a fund management company to provide more than 20% of the total amount of the project, the remaining part of the source of funds is mainly absorbed by the banks and the community of idle capital, the use of 100% of the benefits of enjoying the benefits of low taxes, "to two Bo8 The remaining part of the source of funds is mainly to absorb the banks and social idle capital, using the benefit of 100% low tax "two for eight" leverage to obtain huge amount of funds for the leasing project. The rest of the practice is basically the same as financial leasing, except that the complexity of the contract increases due to the wide range of issues involved. Due to the tax benefits, standardized operation, good comprehensive benefits, safe rental recovery and low cost, it is generally used for the financial leasing of aircraft, ships, communication equipment and large complete sets of equipment.3. Entrusted Financial LeasingOne way is that the person who owns the funds or equipments entrusts the non-banking financial institution to engage in the financial leasing, and the first lessor is the principal at the same time, and the second lessor is the trustee at the same time. The lessor accepts the principal's funds or the subject matter of the lease, according to the principal's written commission, to the principal's designated lessee financial leasing business. The ownership of the subject matter of the lease is vested in the principal during the lease period, and the lessor only receives the handling fee and bears no risk. A major feature of this entrusted leasing is that enterprises without the right to lease business can "borrow the right" to operate. E-commerce leasing that rely on entrusted leasing as a business leasing platform. The second way is that the lessor entrusts the lessee or a third party to purchase the leased goods, and the lessor pays for the goods according to the contract, which is also known as entrusted purchase of financial leasing.4. The lessee of the project financial leasing is guaranteed by the project's own property and benefits, and the lessor enters into a project financial leasing contract with the lessor, the lessor has no recourse to the lessee's project other than the property and income, and the collection of rents can only be determined by the project's cash flow and benefits. Determination. The seller (i.e., the producer of the leased item) takes this approach to market its products and expand its market share through a leasing company that it holds. Communications equipment, large medical equipment, transportation equipment and even highway operating rights can be used in this way. Others include return leasing, also known as sale-and-leaseback financial leasing; and finance-to-lease, also known as sub-finance leasing. The risk of financial leasing[edit paragraph] The risk of financial leasing comes from many uncertain factors, is multifaceted and interrelated, in the business activities to fully understand the characteristics of the various risks, in order to comprehensively and scientifically analyze the risk, and formulate corresponding countermeasures. The risk types of financial leasing are mainly as follows: (1) product market risk. In the market environment, whether it is financial leasing, loans or investment, as long as the funds are used for additional equipment or technological transformation, the first thing to consider is the market risk of the products produced with the leased equipment, which requires an understanding of the sales of the products, the market share and the ability to occupy the market, the development trend of the product market, the structure of consumption as well as the consumer's mentality and ability to consume. If these factors are not fully understood and investigated in detail, it is possible to increase the market risk. (2) Financial risk. As financial leasing has financial attributes, the financial risks run through the whole business activities. For the lessor, the biggest risk is the lessee's ability to pay back the lease, which directly affects the operation and survival of the leasing company, therefore, the risk of paying back the lease from the beginning of the project should be highly concerned. Currency payments can also be risky, especially international payments, the payment method, payment date, time, remittance channels and payment means of improper choice, will increase the risk. (3) Trade risk. Because financial leasing has trade attributes, trade-related risks exist from ordering negotiations to trial acceptance. Because of the commodity trade in recent times the development of a more complete, the community has also correspondingly established supporting institutions and preventive measures, such as letter of credit payment, transportation insurance, commodity inspection, commercial arbitration and credit counseling have taken precautions against risk and remedial measures, but due to the different degree of awareness and understanding of the risk of some means of commercial nature, coupled with the lack of experience in business management and other factors, these means are not being All adopted, making the trade risk still exists. (4) Technology risk. One of the benefits of financial leasing is to introduce advanced technology and equipment before other enterprises. In the actual operation process, factors such as whether the technology is advanced or not, whether the advanced technology is mature or not, and whether the mature technology infringes on the rights and interests of others in law are all important reasons for technical risks. In serious cases, the equipment can be paralyzed by technical problems. Others include economic environment risk, force majeure and so on. Interpretation of China's laws on financial leasing[edit] Article 237 of the Contract Law provides that a financial leasing contract is a contract law in which the lessor purchases a leased object from the seller based on the lessee's choice of the seller and leased object, provides it to the lessee for use, and the lessee pays the rent. The usual practice of financial leasing is the lessor to fund the purchase of technical equipment or other materials selected by the lessee, as a lease to the lessee, the lessee to obtain the long-term right to use the leased goods according to the contract, in the lease period, according to the contractual period of payment of rent, the lease expires according to the contractual disposal of leased goods law. The following three forms of financial leasing contract on the leased property: a. Surrender law. Commercial lease contract expires, the lessee according to the requirements of the lease contract will be returned to the lessor, the lessor to dispose of the leased property, due to the leased property in the lease expiration period have generally reached the use of the term, the lessor to recover the difficult to re-rent or transfer, so the leased property after the expiration of the term of the disposal, generally do not use this way law. Second, the renewal method. Business in a reasonable period of time before the expiration of the lease contract period, the lessee shall notify the lessor, on the continued rental of the leased property for negotiation, to determine the renewal of the lease term, rent, etc., in the expiration of the period of the financial leasing contract to sign a renewal of the lease contract law. Third, the law of retention of purchase. The commercial lessee pays the nominal price of goods to obtain the ownership of the leased goods, the lessee obtains the ownership of the leased goods, fixed asset investment, this method is favorable to the lessor, the lessee, so, after the expiration of the period of the financial leasing contract, the treatment of the leased goods is generally used in this way method. Convention on International Financial Leasing[edit] (signed at Ottawa, Canada, on May 28, 1988) Each State Party to this Convention: recognizes the importance of removing certain legal obstacles to international financial leasing of equipment while maintaining a fair balance of interests between the parties to an international financial leasing transaction; is aware of the need to enable the use of international financial leases; is aware that the rules of law governing the traditional contract of lease Aware of the fact that the rules governing traditional lease contracts have yet to be adapted to the unique tripartite relationships arising from financial leasing transactions; and thus aware of the need to develop certain uniform rules relating primarily to the civil and commercial law aspects of international financial leasing;?wtp=tt