introduction in leasing

1. Presented by:
Rose Ann P. Ronquillo
LEASING

3. “Why own a cow when the milk is so
cheap? All you really need is milk and
not the cow.”
-Donald B. Grant

4. Lease
- is a contract between the owner of
an asset and its user for the right to
use the asset.
the lessor – owns the asset
the lessee – user of the asset

5. The lessor has the duty to:
 Deliver the asset to the lessee
 Authorize the lessee to use the asset
 Leave the asset in peaceful possession
Legal Aspects of Leasing

6. The lessee has the obligation to:
 Pay the lease rentals periodically
 Take reasonable care of the asset
 Return the leased asset
Legal Aspects of Leasing

7.  The lessee does not have to pay the cost
of asset at the time of signing the contract
of leases.
 Leasing contracts are more flexible so
lessees can structure the leasing contracts
according to their needs for finance.
Importance of Lease Financing

8.  The lessee can also pass on the risk of
obsolescence to the lessor by acquiring
those appliances, which have high
technological obsolescence.
Importance of Lease Financing

9.  Financial Lease
 Operating Lease
Types of Leasing

10. Financial lease
- all risks and rewards of ownership are
transferred to the lessee.

11. Operating lease
- all risks and rewards of ownership are retained
by the lessor.

12. Other Types of Leasing
 Sale and Leaseback
 Leveraged Lease
 Cross Border Lease

13. Other Types of Leasing
Sale and Leaseback
PERSON
2
PERSON
1

14. Other Types of Leasing
Sale and Leaseback
PERSON
1
PERSON
2

15. Other Types of Leasing
Leveraged Lease
LESSOR LENDER
LESSEE

16. Other Types of Leasing
Cross Border Lease
LESSOR
Country 1
LESSEE
Country 2

17. Advantage of leasing
 Better usage of capital
 Better planning
 Low capital expenditure
 No risk of obsolescence
 Convenience and flexibility
 Easy source of finance

18. Disadvantage of leasing
• Reduced return for equity holders
• Processing and documentation
• No ownership
• Maintenance of the asset
• Penalties on termination of lease
• Price-level changes

19. end…