Market Overview

Leasing often referred to as ”asset based finance” or “A.B.F.” has evolved as a key sales finance industry in every major country in the world. Providing a real, and often preferable, alternative to such conventional financing products as bank loans, conditional sales contracts or cash, leasing has been able to service a vast spectrum of the capital asset needs for virtually every type of business imaginable. Today, one can observe the leasing advantage being used by business, industry, government, associations and even consumers as they opt to lease their cars.

The fundamental marketing strategy employed historically in leasing has been the “pay as you use” philosophy and was originally combined with the “buy assets that appreciate - lease assets that depreciate” philosophy as well as (sometimes elaborate) Lease versus Purchasing models that served to illustrate the tax advantages available via leasing. Over the years, the benefits of leasing have evolved into three categories:

Convenience - Leasing companies generally are more “business-friendly” in their approach to applications. They genuinely try to make deals and they cherish their relationships with clients. Of course, there is the convenience of using a much needed asset for reasonable monthly payments. Lessors also structure deals and/or payment cycles for the convenience of the Lessee (these would include such structures as quarterly, semi-annual payments, seasonal payments and “step-up” (or “step-down”) payments.

Cash Flow - Lessors can often create a preferential cash flow situation for the Lessee. This is accomplished via longer terms and/or the use of residuals, all of which serve to reduce payments.

Economic - Such credit facilities as bank lines, etc., should be conserved for operating/productivity purposes. This is especially true of tough economic times. A well run business recognizes this and understands that leasing is truly the best option for capital asset requirements.