Funding
through Leasing

Is leasing the service you need? Let’s first clarify what leasing means.

Leasing is a medium to long-term financial instrument used for renting or acquiring new or second-hand assets. This non-banking financing technique is highly recommended for newly launched companies, SMEs, and companies without substantial tangible collateral (fixed assets), or heavily indebted companies.

Leasing plays a crucial role in business development and also helps in boosting sales, especially for long-term use goods.

Financial leasing is an asset-based financing, as the leasing company’s ownership right over the asset provides sufficient collateral for financing in most situations.

Operational leasing is akin to a medium to long-term rental contract, and at the end of the contractual period, the asset is returned to the leasing company, which bears the risk of disposal.

Business development requires significant financial efforts, and adequately equipping your company with necessary equipment can be costly. Regardless of the project’s value, we support you in obtaining the equipment you need through Operational Leasing or Financial Leasing.

What types of equipment can you acquire through leasing?

• Cars
• Machinery
• Medical Equipment
• Real Estate
• Agricultural Equipment

How can our specialized brokers help you if you want to obtain leasing?

• We get the best leasing deals for you because the request submitted to leasing companies is  tailored to your needs,
• Within 24 hours, we summarize at least 5 leasing offers,
• We assist you in preparing the financing file,
• We provide support throughout the leasing process,
• You’re accurately informed about every cost involved in the monthly installment,
• Financial consultancy for obtaining leasing is FREE for our clients.

What are the most common types of leasing?

• Direct Leasing
• Financial Leasing
• Sale and  leaseback

Direct Leasing

It is the form of leasing whereby the one who offers the “good” for rent, the manufacturer, is the one who owns the good. The user only has the right to use the ‘good’. Often the lessee is also obliged by the leasing contract to provide maintenance service. In this case we speak of a service lease. A very important element in direct leasing is the cancellation clause. The user of the “good” can decide to stop paying the rent before the end of the lease term when the good has become morally unacceptably worn out or when it is no longer necessary to extend the contract because of the decline of the lessee’s business. It should be noted in direct leasing that the lease payments do not fully cover the cost of the “asset” and the lease term is much shorter than the normal period of use of the asset, with the lessee expecting either to sell the asset at the end of the lease or to lease the “asset” to other lessees.

Financial Leasing

In this form of leasing there are three parties: the financier, the user and the supplier of the “good”. The user selects the ‘good’ and negotiates the price and delivery term with the supplier, then negotiates the terms of the lease with the financier. The financier, usually a leasing company, buys the good and offers it to the user under a leasing contract.

A particular form of finance leasing is leverage leasing. Specifically, the financier provides the lessee with a large part of the funds needed to purchase the asset. The lessee must repay the loan taken out to purchase the asset. The lease payment varies according to the financial conditions under which the loan was obtained.

Financial leasing is an operation that meets at least one of the following conditions:

• The risks and rewards associated with the ownership of the “asset” being leased are transferred to the user when the leasing contract becomes effective;
• The leasing contract explicitly stipulates the transfer of ownership of the “asset” to the user upon the contract’s expiration;
• The user has the option to buy the “asset” at the end of the contract, and the residual value expressed as a percentage is less than or equal to the difference between the maximum normal useful life and the leasing contract duration, relative to the maximum normal useful life, expressed as a percentage;
• The leasing period exceeds 80% of the “asset’s” maximum normal useful life; in this definition, the leasing period includes any extension period;
• The total value of the leasing payments, excluding Ancillary Costs, is greater than or equal to the “asset’s” purchase value;

The leasing contract’s value is determined by the sum of all payments, and in the case of “asset” acquisition, the residual value is added. The primary component of the payments is amortization. According to the provisions of Article 5, letter c) of Ordinance No. 70/1994, as amended by Law No. 90/1998, the paid royalty will be calculated considering the profit margin and the full amortization of the “asset” or at least a portion of its purchase value. In this case, the amortization schedule will be agreed upon by the parties, depending on the nature of the “asset” and its purchase value, in accordance with Law No. 15/1994 on the amortization of capital invested in tangible and intangible fixed assets.

Operational Leasing is an operation that does not meet the legal criteria to be classified as financial leasing.

The most significant differences between financial leasing and operational leasing are:

In the case of financial leasing, the User’s intention is to acquire an “asset” in installments from a Provider, based on the financing provided by the Lessor/Financier;

In the case of operational leasing, the User’s intention is to rent an “asset” for a specified period from a Lessor;

Sale and Leaseback: This is a financial leasing operation in which the User is also the “asset” provider. The Financier purchases the “asset” from the User at a mutually agreed-upon value, in line with the financier’s risk policies. Through this operation, the User’s financing is realized by taking the “asset” out of the balance sheet, with the intent to reacquire it at the end of the leasing contract. This way, the User can obtain quick cash that can be reinvested without losing ownership of the “asset.” Of course, the evaluation of the “asset” subject to the contract is crucial and rests with the Financier since the “asset’s” valuation determines the financed amount by the leasing company.

Find out the phases of the leasing operation

• Purchase of the “asset” by the financing company;
• Gradual repayment by the beneficiary of the credit received through the payment of royalties, using the financial resources obtained from the operation of the asset (of the investment). The leasing contract royalty includes: the depreciation rates of the asset, the rent on the non-depreciated capital, taxes, insurance, as well as a profit margin of the financing company
• The right of the lessee to express an option on the leased asset at the end of the contract.

At the end of the rental period, the user has the following possibilities:

• Return the asset to the funder, thus ending the contract;
• Renew the lease for a new period and at a reduced rent. Leasing cannot be However, it cannot be assimilated to a sale on credit, because until the term of the tenancy expires and the option to purchase is exercised, the user is merely a tenant and the transfer of ownership does not operate retroactively;
• To buy the asset at a residual price (the difference between the price paid by the investor and the amounts returned, periodically, by the beneficiary). As the purchase price is lower than the real value of the asset, this option is the most advantageous for the user.

Leasing cost optimization:

Most leasing companies finance goods purchased in euros and charge customers at the group banks’ selling rates; ask us how you can optimise these costs;

If the Lender will pay the equipment to the Supplier and the Supplier will deliver it later, you may be charged refinancing interest; ask us how you can optimise these costs;

In some contracts there are monthly administration fees as well as early closure fees; ask us how you can optimise these costs;

A financial product broker does not charge commissions from clients. Therefore, the financial broker’s services are free, as the credit institutions and non-bank financial institutions pay the credit broker for the intermediation of each loan.