When does leasing make sense?
Leasing is highly popular, mainly because it is a flexible financing solution and can now be used for almost all capital assets – mobile property, real estate and intangible assets such as software. Demand for leasing is particularly strong for investments in innovative technologies that are subject to short investment cycles, for individual applications or contractual arrangements or if other financing options are needed for further investments.
In other words, leasing is today an established part of the funding mix for many companies. Often the aim is to conserve liquidity and make use of additional
services.
What should companies look out for when choosing a provider?
The leasing company must be right for the specific investment asset. For complex investments, in production facilities for example, or for individual special projects, the leasing partner's asset and advisory competence are vital. For international investment assets their network in the country concerned is a success factor. And with classical machinery or fleet leasing, the fair residual value calculation at the end of the lease term plays an important role.
What aspects should the lease cover?
The structure of a leasing agreement depends to a great extent on the specific investment asset. As a rule of thumb, the contract should cover the following points: leased asset, initial value, lease term, lease rate, residual value calculation and on what basis and frequency the asset is to be used. Then for some contracts there are additional provisions on services such as maintenance and insurance.
