Financial leasing is a new type of financing that first appeared in the United States after World War II. China's financial leasing industry is at the beginning of the reform and opening up, by Mr. Rong Yiren took the lead in advocating, the introduction of foreign investment in China, the use of foreign high-tech equipment has a huge role in promoting. Here is what characteristics of financial leasing shared by me, I hope it is useful to you.
What are the characteristics of financial leasing
1. The lease is decided by the lessee, the lessor to fund the purchase and lease to the lessee, and can only be leased to an enterprise during the lease period.
2. The lessee is responsible for the inspection and acceptance of the leased goods provided by the manufacturer, the quality of the leased goods and technical conditions of the lessor does not guarantee the lessee.
3. The lessor retains ownership of the leased property, the lessee pays the rent during the lease and enjoys the right to use, and is responsible for the management, repair and maintenance of the leased property during the lease.
4. Once the lease contract is signed, no party has the right to unilaterally withdraw from the contract during the lease. Only if the leased property is destroyed or proved to have lost its value can the contract be suspended, and the penalty for breaking the contract without reason is quite heavy.
5. At the end of the lease term, the lessee generally have two options for the leasehold purchase and surrender, if you want to stay in the purchase, the purchase price can be determined by the negotiation between the two parties to the lease.
The main methods of financial leasing
Simple financial leasing
Simple financial leasing refers to: the lessee chooses the leased object 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 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 by a leasing company to lead 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 relies 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 can provide repair and maintenance of the leased object or not, and the lessor will depreciate the leased object for accounting purposes.
International finance sublease
Leasing company from other leasing companies to finance the leased object, and then sublease to the next lessee, this business is called finance sublease, generally in the international. At this time, the business practice with simple financial leasing is not very different. The business process of the lessor leasing equipment from other leasing companies, because it is carried out among financial institutions, in the actual operation process, only based on the purchase contract to determine the amount of financing, in the purchase of the leased object in the operation of the funds is always with the final lessee has no direct contact. 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 for 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 provided 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 through the purchase of units needing funds issued securities, the funds provided to these financial intermediaries. Securities, the funds provided to these units to use, so as to realize the process of capital financing.
The development of financial leasing
Origins
Modern financial leasing emerged in the United States after World War II. After World War II, the United States industrialized production surplus, manufacturers in order to promote their own production of equipment, began to provide financial services for the user, that is: to installment, consignment, credit sales and other ways to sell their equipment. Due to the transfer of ownership and the right to use at the same time, the risk of capital recovery is relatively high. So some people began to borrow the practice of traditional leasing, the sale of objects to retain the ownership of the seller, the buyer only enjoy the right to use, until the lessor to finance all the funds to recover in the form of rent, before the ownership of a nominal price to transfer to the buyer. This method is known as ? finance lease? In 1952, the world's first financial leasing company was established in the United States. American Leasing Corporation (now renamed American International Leasing Corporation), pioneering the modern leasing.
History in China
China's modern leasing industry began in the 1980s with the reform and opening up, in order to solve the shortage of capital and the need to introduce advanced technology, equipment and management from abroad, under the advocacy of Mr. Rong Yiren, as a channel to increase the introduction of foreign capital, the concept of financial leasing was introduced from Japan, and China International Trust and Investment Corporation (CITIC), as the main shareholder, was established. Ltd. and China Leasing Co., Ltd. as the main domestic financial institutions to carry out the financial leasing business, using this method to introduce advanced production equipment, management, technology, improve product quality from abroad, and improve China's export capacity.