What is a finance lease review?

Financial leasing, also known as financial leasing or purchase lease. It is the most common and basic form used internationally. According to the definition of the International Institute for the Unification of Private Law (UNIDROIT) Convention on Financial Leasing, financial leasing refers to a transaction in which the lessor, at the request of the lessee and in accordance with the specifications provided by the lessee, enters into a contract of supply with a third party (the supplier), under which the lessor acquires the plant, capital goods or other equipment (hereinafter referred to as the equipment) on the terms agreed to by the lessee to the extent to which the lessee's interests are concerned. Furthermore, the lessor enters into a lease contract with the lessee (user) granting the lessee the right to use the equipment on condition that the lessee pays rent. The characteristics of a financial lease are: 1. A financial lease is a self-contained tripartite transaction involving at least three parties; i.e., the lessor, the lessee and the supplier, and consisting of at least two contracts (the sale and purchase contract and the lease contract). These three parties are related to each other, the two contracts constrain each other. 2, the equipment to be leased by the lessee to choose, the lessor is only responsible for the user's requirements to give financing facilities, the purchase of equipment, is not responsible for equipment defects, delayed delivery and other liabilities and equipment maintenance obligations; the lessee shall not be used as a reason for delinquency and refusal to pay the rent. 3, the amount of liquidation, that is, the lessor in the basic lease period only leased the equipment to a specific user, the lessor from the user should be collected from the total amount of rent equal to the leasing transaction of all the investment and profit, or according to the standards of the lessor's country on the financial leasing, equal to the total investment of a certain percentage, such as 80%. In other words, the lessor in this transaction will be able to recover all or most of the investment in the transaction. 4, non-cancelable, for the lessee, the leased equipment is the lessee according to their own needs and selected by themselves, therefore, the lessee can not return the equipment as a condition for the early termination of the contract. As for the lessor, since the equipment is a purchased commodity, the lessor cannot raise the rent during the lease period on the ground of market price increase. In short, in general, the lease term of both parties do not have the right to suspend the contract. 5, the ownership of equipment and the right to use long-term separation. The ownership of the equipment in the law belongs to the lessor, the use of equipment in the friendship of the lessee in the Jinan City. 6. The lessee shall bear the costs of insurance, maintenance and repair of the equipment and the risk of equipment obsolescence. 7. At the end of the basic lease term, the lessee has the three options of retaining, renewing or surrendering the equipment. The main forms of financial leasing business are: 1, direct financing, single investor leasing, reflecting the basic characteristics of financial leasing, is the most used form of financial leasing business. The other forms of financing are derived on the basis of the combination of certain credit characteristics. 2, sublease, refers to the two leasing companies at the same time successive operation of a financial leasing business, that is, by the lessor A according to the requirements of the final lessee (user) to the lessee's identity from the lessor B first leased equipment, and then sublease the identity of the lessor to the user to use the leasing transaction. 3, sale and leaseback, also known as rental leasing, refers to the owner of the equipment will be part of their original property sold to the lessor in order to obtain financing facilities, and then to pay rent as the price of leasing, and then leased back from the company has been sold property of a leasing transaction. For the lessee enterprise, when it is in urgent need of cash turnover, sale and leaseback is an effective means to improve the financial situation of the enterprise; in addition, in some cases, the lessee can also get the cash income from the premium of the equipment through the sale and leaseback of the equipment that can be appreciated in value; for the lessor of non-financial institutions, the sale and leaseback is a simple and easy method to expand the type of business. Leveraged leasing, also known as balanced leasing, is an advanced form of financial leasing, applicable to long-term leasing business of highly capital-intensive equipment with a value of more than a few million dollars and an effective life of more than 10 years, such as airplanes, ships, offshore oil drilling platforms, communication satellite equipment and complete sets of production equipment, etc. Leveraged leasing refers to the leasing of equipment under a single transaction. Leveraged leasing refers to a leasing transaction in which the lessor only needs to invest 20%-40% of the purchase price of the leased equipment to legally own the full ownership of the equipment and enjoy the same tax treatment as if it had invested 100% in the equipment; 60%-80% of the purchase price of the equipment is resolved by non-recourse payments from financial institutions, such as banks, but it requires that the lessor use the leased equipment as collateral, transfer the leasing partner and collect rentals. A leasing transaction in which the lessor pledges the leased equipment and guarantees the right to assign the leasing partner and collect rent. The parties involved in the transaction, the transaction procedures and the legal structure are more complex than the basic form of financial leasing.