What is leasing?
Leasing is an innovative way of acquiring equipment, machinery or other assets without having to pay the full amount upfront. The basic concept is that the profits are earned through use and not ownership of the equipment.
Leasing is defined as a written contract entered into between a leasing company (called "the Lessor") on the one part and the User of the equipment (called "the Lessee") on the other part whereby the Lessee agrees to pay the Lessor a specified sum of rentals over an obligatory period of time in consideration for the use of capital equipment owned by the Lessor without the Lessee having to purchase or own the equipment.
1. Leasing is the quickest means of obtaining equipment finance without lengthy and time consuming procedures.
2. Leasing allows conservation of working capital that can be utilized for other productive business purposes.
3. Fixed and variable rental payments assist in budgeting and ease cash flow.
4. Hedges against inflation as rental payments are made out of future earnings.
5. Lease rentals paid are allowed to be charged as a tax deductible expense in the profit and loss statement of the lessee.
6. Leasing is acceptable within the Islamic modes of financing as rental payments are made and interest is not involved.
7. Simplified documentation and personalized service.
8. Lease period can be tailored to match the practical useful life of the equipment.
9. Up to 90% financing for qualified applicants. Who can lease?
1. Sole proprietorship concerns
2. Partnership firms
3. Private Limited Companies
4. Listed and unlisted local and multinational joint stock companies
6. Liaison offices of multinationals
Which industries/business sectors use leasing?
1. Manufacturing concerns
3. Construction industry
4. Distributors/Traders etc.
5. Self employed professionals
7. Printing and packaging
8. Information Technology
What equipment can be leased?
1. Plant and machinery
2. Construction and heavy equipment
3. Medical equipment
4. Computers and IT related equipment
5. Office equipment
6. Commercial and private vehicle