Leasing Practice
Step 4 – Choosing a LessorOne of the parties to the... More
This too is a step, which the future lesseeThe lessee is the user of... More must undertake, although it is oftern neglected and left to chance.
The mantra that “he who gives me money, must be a good person!” is not always true. Here are a few consideration why:
- Additional possibilities
The fact is that there are many different promotions offered by leasing companiesA company whose main activity is... More – free insurance, discounts on the price, reduced interest, purchase of old equipment, free additional equipment and much more. Many of these promotions are a pure marketing tool and seldom benefit the lesseeThe lessee is the user of... More. At the same time, some of them are completely real and actually add value to the lease deal. The LessorOne of the parties to the... More usually uses the power of his financial group or that of his or her partners to offer a leasing service that really differs from others.
The BMW group, for example, have specific requirements on the applicable interest rates and leases on their cars, which they successfully impose on their leasing partner companies. “This imposition” is not necessarily at the expense of the LessorOne of the parties to the... More. If necessary, BMW subsidizes deviations from the desired interest and fees in markets where interest rates are higher than required.
CaptiveCaptive Leasing Company is a company... More leasing companiesA company whose main activity is... More have amazing capabilities to balance leasing rates and profits from car sales (we say “car” because most CaptiveCaptive Leasing Company is a company... More companies are precisely “CaptiveCaptive Leasing Company is a company... More” to automakers or car dealers). They often consider leasing only as a way to increase their sales. That is why many of the CaptiveCaptive Leasing Company is a company... More leasing companies’ offers are at priced at the rates of bank credits for large clients /i.e. have low interest rates/. Do not be surprised. The objective of the CaptiveCaptive Leasing Company is a company... More is only to increase the number of cars sold and accordingly sells its service at prices equal to or close to the cost of the financial resources they use. Their profit comes from the sale of cars. Various additional combinations associated with extra car equipment, high residual valueThe residual value is present in... More, free technical support can often be noted – the captives have these options at their hand.
Other lessors are part of large financial groups, with sister insurance companies. You have already figured out where the “free insurance” comes from. Sometimes insurance promotions may also have been achieved by partner insurance companies.
The conclusion is that it is quite reasonable that when we have already decided to purchase an asset by leasing, we should study the market for such a leasing companyA company whose main activity is... More that can offer the best conditions and accompanying promotions, as we see fit for our needs.
It is true that there are many lessors in Bulgaria. A check in the BNB register for 2017 shows that there are over 100 leasing companiesA company whose main activity is... More in our country. Not everyone, however, is suitable for every lesseeThe lessee is the user of... More. Each LessorOne of the parties to the... More has a certain focus of his business. Some specialize in leasing new cars, others specialize in leasing used cars, third yet have chosen an even narrower focus – leasing of used cars to individuals only. Of course, there are lessors who prefer corporate clients. For some, leased machinery and equipment is a daily routine, for others, this would be challenging. Some are looking for large multi-million deals, others are specializing in many lower-priced deals. Some prefer the maximum lease termThe lease, or leasing term, is... More of 5-6 years, others are limited to a short-term lease, often measurable in months. Each LessorOne of the parties to the... More has a certain focus, even if he changes over the years depending on the situation.
The above does not mean to say that the LessorOne of the parties to the... More can not leave his “comfort zone”. At the same time striking a deal, which is out of the lessor’s focus usually carries with it additional financial burden for the lesseeThe lessee is the user of... More.
For a prospective lesseeThe lessee is the user of... More, it is sensible to look for lessors who specialize in the leasing the needed asset, feel comfortable with the amount of the lease, the term of the lease, and all other requisites of the deal.
As we will see in the next step of the lease practice, each LessorOne of the parties to the... More, in one way or another, performs a credit rating of the potential lesseeThe lessee is the user of... More. This analysis naturally leads to different outcomes for the various lessees. Some lessors are only looking for top rated borrowers, who have never defaulted on their credit obligations, have an excellent cash flow, and the prospects are just to increase it. Others specialize in risky lessees. Naturally, there are many nuances of tolerable risk between the two extremes, which the lessors are willing to take.
It is sensible for the prospective lesseeThe lessee is the user of... More to have a good personal assessment of his / her creditworthiness. He can check his file in the Central Credit Register at the National Bank, because the same information will be used by the leasing companyA company whose main activity is... More to determine the history of future lessor’s former credit behavior. Then you have to look for a LessorOne of the parties to the... More who will be willing to take that risk. Deviating from this approach poses a threat either to make the lease deal impossible or to slow it down considerably. The own creditworthiness analysis may also be helpful and sometimes sobering, which is not necessarily a bad thing.
Some leasing deals also imply easy delivery. The delivery is negotiated by e-mail and telephone and is completely straight forward – for example, the purchase and delivery of a new car from the respective dealerSee Supplier... More for Bulgaria. At the same time, some leasing assets are much more sophisticated for purchase and delivery. These may even be custom-made incorporate a delivery term of six months to one year. Industrial equipment, electric generators, expensive vehicles and all the specific assets are quite complex to supply. For such leasing transactions, excellent coordination will be required between the supplierThis is one of the parties... More, the LessorOne of the parties to the... More and the lesseeThe lessee is the user of... More. It is clear that the supplierThis is one of the parties... More is specialized in manufacturing the selected asset. It is also clear that the lesseeThe lessee is the user of... More who needs the asset has the necessary expertise. It is important that the LessorOne of the parties to the... More is also up to speed.
It is important for the lesseeThe lessee is the user of... More, especially if the lease assetThe leasing asset is the subject... More is more sophisticated for delivery, to make sure that the selected LessorOne of the parties to the... More has the necessary experience in delivering the selected asset. This will ensure the conclusion of a good delivery deal, the necessary warranty conditions, the necessary control of the payments to the supplierThis is one of the parties... More, and even sometimes – price reduction.
It is possible that the lesseeThe lessee is the user of... More needs only one leased car and that will be all for the next ten years.
For many lessees, however, this is not enough. Some will want to replace the new car now with another one after 3 or 4 years. Others will want to buy a second, third, and even a whole fleet of cars. Some will seek a LessorOne of the parties to the... More to support them in financing and renewing their fleet, financing the equipment of the new workshop, and so on.
Lessors also have different agendas. Some are actually targeting single lease deals and are not looking for repeat customers. Others not only look for new deals, with their already tested old clients, but are also willing to give different bonuses to them for each subsequent deal.
It is reasonable for the lesseeThe lessee is the user of... More to look into the future, as much as this is possible, and then to find a LessorOne of the parties to the... More, who can meet the current and future leasing needs.
- Financial capabilities
It is reason to accept that every LessorOne of the parties to the... More will easily be able to lease a new car. At the same time, not everyone will be able to finance a whole fleet of 100 cars. The financial capabilities of different lessors are not the same.
It is advisable for the lesseeThe lessee is the user of... More to be familiar with the scale of his future LessorOne of the parties to the... More and his capabilities. Concluding transactions on the edge of the lessor’s financial capabilities is not a good idea. This may make the service more expensive, more difficult or even worse.
In conclusion, the lease transaction, unlike many other deals and services, implies a long-lasting interaction between the LessorOne of the parties to the... More and the lesseeThe lessee is the user of... More. Relationships between the two parties can grow into a partnership and this is a guarantee of getting an optimal leasing service. The leasing service satisfies a need of the lesseeThe lessee is the user of... More. Hence it is somehow his responsibility to find such a LessorOne of the parties to the... More who can actually become a leasing partner for the current and for subsequent leasing deals.