Q: How can I choose the leasing company, which is appropriate for me?
Answer:
- Very often, upon choosing the asset, which you would like to acquire, the vendor of the equipment will suggest a leasing company with which they have an ongoing partnership. With the captive leasing companies, this will be compulsory. It is usually not necessary to listen to the suggestions of the vendor, but this will shorten the time necessary for you to find the appropriate lessor.
- In the ideal case, it will be perfect if you are able to acquire several leasing offers for the required asset from many lessors and choose the best one. Often this will be hard to accomplish. Therefore read on further.
- It is important to know that each leasing company has some specific target. Some are specialized in leasing vehicles, others of industrial equipment, third – of agricultural equipment. Specialization exists in the preferred leasing type by the lessor – some focus ton financial leasing, while others prefer operational leasing. Specialization exists also in the target lessees – some service corporate bodies and some are specialized in servicing individuals. In choosing a lessor it is good to keep in mind their specialization. There is not much use in us requiring an improvement of the leasing offer if we are not in “the target customer group” of the lessor.
- If you are acquiring the first machine for the equipment of a whole plant, it is reasonable to focus on the bigger leasing companies. One of them may become your strategic partner, supporting you in the years to come and in the acquisition of each following machine and equipment, without paying heed to the total amount of your requirements (provided your credit rating is sufficient). Discuss with your new partner your future leasing needs and the capabilities of the lessor.
- If you are looking for full-service operational leasing, your selection will be limited to but a few companies (in Bulgaria). Their reputation for the services they provide will be important for your decision – service, reserve vehicle, tires, etc.
- One of the easy ways for choosing your lessor could be his history. The logic is that the older leasing companies the administration will be cleared from defects over the years. As a potential lessee, you are likely to have intensive interaction with the administration of your lessor and it would be advisable to communicate and depend on experts.
- Last, but not least, is the price of the leasing service. As a rule, the bank leasing companies use relatively cheaper financial resources and respectively may offer lower leasing interest to their clients.
- On the other side, the „captiveCaptive Leasing Company is a company... More” leasing companies have the capability of offering various “promotions” to their clients, as they are subsidized by the mother company.
- As sad as it may sound, for certain asset you will not have much choice. Such is the case with used cars, especially older than 5-6 years from first registration. Your aim in such cases will be to find a leasing company which is willing to finance such a deal. Your choice will also be limited, should the credit history of the lessee be marked with previous defaults in the Central Credit Register from prior credits and leasing contracts.
Q: What leasing interest may be considered “normal”?
Answer:
It very much depends on the profile of the lessee – normally the rates for individuals are the highest, followed by SMEs and the lowest interest rates used by large corporates. This interest rate distribution follows the risk of the lessor to some extent. The interest rate may also be influenced by the type of leasing asset – the more liquid the asset the lower the interest rate. It is also of importance whether the interest rate is fixed or floating. The fixed interest rate is normally better for the lessee, however, it will carry a small premium.
With all that said, we need to mention the various economic cycles of the market, which carry different interest rates with them. Currently, interest rates are rather low and an average mid-risk lessee will enjoy an interest rate of 6% p.a.
Do not forget that further to the interest rate the lessees need to be aware of the Annual Percent of Expenses or the APE – with some lessors the various fees and taxes have a great weight in the APE, sometimes even exceeding that of the leasing interest.
Q: What term is reasonable for me to ask for leasing my car?
Answer:
The average terms, offered by all leasing companies for cars range from 1 to 6 years, stated in months divisible by 6 - 12, 18, 24, etc. The tenor is usually selected by the lessee. The shorter term will carry higher monthly installments and the reverse – the longer term will have smaller monthly installments. You can experiment with our leasing calculator in order to determine the most appropriate term for you.
