How to determine whether the ownership of financial leasing is transferred
Criteria for financial leasing: (1) at the expiration of the lease term, the ownership of the leased asset is transferred to the lessee, this lease is a financial lease.
(2) The lessee has an option to purchase the leased asset at a purchase price that is expected to be substantially less than the fair value of the leased asset at the time the option is exercised, so that it is reasonably certain at the inception date of the lease that the lessee will exercise the option. In the original guidelines will be much lower than the proportion determined as 5%; but the new guidelines are not specified in the specific proportion, there are enterprises according to the circumstances of the judgment.
(3) Even if the ownership of the asset is not transferred, the lease period accounts for most of the useful life of the leased asset. Of which? The majority? , usually mastered in the lease period accounted for more than 75% of the useful life of the leased asset (including 75%). The above example of brand new equipment life of 3 years, the lease period of 3 years, belonging to the finance lease.
(4) the lessee in the lease commencement date of the present value of the minimum lease payments, almost equal to (?90%) the lease commencement date of the fair value of the leased asset; the lessor in the lease commencement date of the present value of the minimum lease payments, almost equal to the lease commencement date of the fair value of the leased asset. Below is a calculation of the minimum lease payments and their present value from the lessee's perspective, followed by a calculation of their ratio to the fair value of the asset.
Industry development of financial leasing
Financial leasing originated in the United States in the 1950s, and China's modern financial leasing industry started late, beginning with the reform and opening up in the 1980s, when in order to solve the shortage of capital and the introduction of advanced technology, equipment, management needs, as a channel to increase the introduction of foreign capital.2013 China's financial leasing industry in general is developing rapidly.
According to the analysis of "2015-2020 China Financial Leasing Industry Market Outlook and Investment Strategy Planning Analysis Report" released by Prospect Industry Research Institute: China's financial leasing industry has maintained a good momentum of development in recent years, and forecasts suggest that China will surpass the United States in 2017 to become the first financial leasing country in the world. According to the latest data, as of the end of June 2013, the balance of financial leasing contracts in China was about RMB 1.9 trillion, an increase of about RMB 350 billion over the beginning of the year when it was RMB 1.55 trillion, with a growth rate of 22.6%. Among them, the balance of financial leasing contracts was about RMB 740 billion, an increase of 12.1% from RMB 660 billion at the end of last year; the balance of domestic leasing contracts was about RMB 660 billion, an increase of 22.2% from RMB 540 billion at the end of last year. China's financial leasing industry has maintained a good development trend. The role of the financial leasing industry in the overall economic development is becoming more and more obvious.
The main methods of financial leasing
Simple financial leasing
Simple financial leasing refers to: the lessee chooses the leasing object to be purchased, and the lessor leases the leased object to the lessee through the leasing project risk assessment. The lessee has no ownership but enjoys the right to use and is responsible for the repair and maintenance of the leased object during the entire leasing period. The lessor is not responsible for the good or bad of the leased object, and the equipment is depreciated on the lessee's side.
Leveraged financial leasing
Leveraged leasing is similar to the practice of syndicated loans, is a kind of specializing in large-scale leasing projects with tax benefits of financial leasing, mainly led by a leasing company as the backbone of the company, for a mega leasing project financing. First set up an operating organization separate from the main body of the leasing company? Exclusively for this project to 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 to absorb the banks and the community's idle lobbying, using 100% to enjoy the benefits of low tax? The leverage of two to eight? s 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 as a result of the wide range of issues involved. Because of the tax benefits, standardized operation, good overall efficiency, safe rental recovery, low cost, generally used for aircraft, ships, communications equipment and large sets of equipment for financial leasing.
Entrusted financial leasing
One way is that the person who owns the funds or equipment entrusts the non-banking financial institution to engage in financial leasing, 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 funds or the subject matter of the lease from the principal, and according to the principal's written entrustment, handles the financial leasing business to the lessee designated by the principal. The ownership of the subject matter of the lease belongs to 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 it allows enterprises without the right to lease business to ? Borrow the right? Business. 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 person to buy the leased goods, the lessor pays for the goods according to the contract, also known as entrusted purchase financial leasing.
Project financial leasing
The lessee takes the project's own property and benefits as a guarantee, and signs a project financial leasing contract with the lessor, and the lessor has no recourse to the lessee's property and benefits other than the project, and the collection of rents can only be determined by the cash flow and benefits of the project. The seller (i.e., the producer of the leased item) takes this approach to marketing its products and expanding its market share through its own holding company, the Leasing Company. Communications equipment, large medical equipment, transportation equipment and even highway operating rights can be used in this way. Others include return type leasing, also known as sale and leaseback financial leasing; finance to lease, also known as sub-financial leasing and so on.
Operating lease
On the basis of the financial lease to calculate the rent more than 10% of the residual value, the end of the lease period, the lessee of the leased object can choose to renew the lease, leaseback, stay purchase. The lessor of the leased object can provide repair and maintenance, or not, accounting by the lessor of the leased object to extract depreciation.
International Finance Sublease
If the leasing company leases the leased object from other leasing companies, and then subleases it to the next lessee, this kind of business is called a finance sublease, which is generally carried out in the international arena. At this time, the business practices with simple financial leasing is not very different. The business process of leasing equipment from other leasing companies by the lessor is carried out among financial institutions, and in the actual operation, the amount of financing is determined only on the basis of the purchase contract, and there is always no direct contact with the final lessee in terms of the operation of funds for the purchase of leased objects. In the practice can be very flexible, sometimes the leasing company will even directly purchase contract as a leased asset to sign a sublease contract. This practice is actually the leasing company to finance a way of capital, the leasing company as the first lessee is not the end-user of the equipment, and therefore can not withdraw the depreciation of the leased object. Another function of the sublease is to solve the legal and operational procedures of cross-border leasing.
Direct financing
Direct financing is the supply and demand of funds through certain financial instruments to form a direct debt relationship, no financial institutions as an intermediary way of financing funds. Need to incorporate funds into the unit and the financing unit through direct agreement between the two sides of the transfer of monetary funds. The form of direct financing are: buying and selling securities, prepayment of deposits and selling goods on credit, not through banks and other financial institutions, money lending and so on. Direct financing can maximize the possibility of absorbing social capital, direct investment in the production and operation of enterprises, thus making up for the shortcomings of indirect financing.
Indirect financing
Indirect financing refers to the unit with temporarily idle money through the form of deposits, or purchase of banks, trusts, insurance and other financial institutions issued securities, will be temporarily idle funds to these financial intermediaries, and then by these financial institutions in the form of loans, discounting, or through the purchase of units needing funds issued securities, the funds provided to these financial intermediaries, and then by these financial institutions in the form of loans, discounting, or by purchasing units needing funds issued securities, the funds provided to the financial intermediary. Securities, the funds provided to these units to use, so as to realize the process of capital financing.
Risk factors of financial leasing
Product market risk
In the market environment, regardless of financial leasing, loans or investment, as long as the funds are used for additional equipment or technological transformation, first of all, we should consider the market risk of the products produced by the leased equipment, which requires an understanding of the product sales, market share and the ability to occupy the market development trend, consumer structure, and consumer mentality and the market for products. The market share of the product, the market share and the ability to occupy the market, the development trend of the product market, the structure of consumption and the mentality and consumption ability of consumers. If these factors are not fully understood, the investigation is not detailed, it is possible to increase the market risk.
Financial risk
Because of the financial attributes of financial leasing, the financial risk throughout the 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 payment can also be risky, especially international payment, the payment method, payment date, time, remittance channels and payment means of improper choice, will increase the risk.
Trade risk
Because financial leasing has trade attributes, risks in trade exist from ordering negotiations to trial acceptance. Due to the commodity trade in recent times the development of a more complete, the community has also established a corresponding supporting institutions and preventive measures, such as letters of credit payment, transportation insurance, commodity inspection, commercial arbitration and credit counseling have taken preventive and remedial measures against risk, but due to the different degree of awareness and understanding of risk, some means and commercial nature, coupled with the lack of experience in enterprise management and other factors, these means are not adopted in full. All adopted, making the trade risk still exists.
Technology risk
One of the benefits of financial leasing is the introduction of 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 legally 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.