Leasing, its features and subsidized leasing programs of "Global Credit".

Leasing, as a financial tool, has been widely used in the financial structures of Armenia in recent years. For many, it has become a flexible and convenient option for acquiring basic funds.

In a conversation with Banks.am, Nona Gyurjian, head of the sales department of "Global Credit" UMC company, spoke about the possibilities of using leasing, its role in the development of the economy, and also presented the leasing services and subsidized leasing of "Global Credit".

Leasing is not a loan, leasing is a financial instrument

Leasing is not a loan, leasing is a financial lease with pre-fixed terms and duration, and the differences and advantages with a loan are quite numerous and significant. Nowadays, leasing gradually includes a wider scope and is in great demand, due to which it is widely used as a financial instrument in financial institutions.

Leasing is a transaction carried out through a financial lease agreement, the essence of which is the financing of the purchase of fixed assets (for example, agricultural equipment, special machinery or equipment). In this case, the financial organization - the Leasing House, on the order of its customer, the Lessee, acquires a certain property from the Supplier and leases it to the Lessee. Here there are certain credit components with risk consideration and analysis, in particular the Lessee's credit history, solvency, etc. are considered.

As an advantage, I would like to mention that if the Lessee acquires a fixed asset, he is able to use it, make a profit, account, and make expenses. Leasing as a financial instrument is a lower risk product because it is itself a way to generate finance that the lessor can generate income from. A component of low risk is also the fact that the Lessee is not provided with funds, but the object of leasing is provided, and here the risk is reduced compared to the loan.

Subject of leasing

Leasing is most often used by entrepreneurs or companies that need to acquire expensive equipment, vehicles, special equipment or commercial real estate without a large investment. Therefore, any equipment, means of transport, basic means used in production can already be acquired by leasing.

The lessee makes payments in the period determined by the contract and at an interest rate, during that time he uses the object of leasing in full and receives profit from it, he is able to account for this property in the list of his fixed assets, make expenses, receive VAT, etc.

That is, without making a large financial investment, making only a certain advance payment, the lessee is able to acquire such a property that will provide him with a stable income, thanks to which he will be able to repay the leasing amount and receive additional profit.

The object of leasing can be purchased both from the primary and secondary market, and whether it will become the property of the lessee or will be returned to the financial institution is determined by the contract.

Leasing participants, rights and responsibilities

In addition to the two parties of leasing, the lessor and the lessee, the third party in this transaction is also the supplier, from whom the object of leasing is purchased with prior agreement. In other words, the lessee selects the property he needs in advance: agricultural machinery, equipment, etc., and chooses the financial organization through which he will acquire the given object as leasing. A tripartite contract is concluded, that is, the supplier also participates in the entire process. Leasing items are mostly insured, meaning insurance companies can be the other side of the deal. The leasing contract begins to operate from the moment of delivery of the leased object.

Naturally, the contract stipulates certain obligations and rights for the Lessor and the lessee. The lessee undertakes to fulfill his financial obligations defined in the schedule, to make payments and to maintain the acquired property in proper condition. The leasing company has the right to make regular visits, study the condition of the property, perform monitoring, etc.

In case of non-fulfillment of the lessee's obligations, almost the same legal process takes place as in the case of loans, only here it is not a collateral, but the property of a financial organization, and if the lessee is unable to fulfill his obligations, the leased object is legally returned to the lessor. The financial institution has the option of subleasing the item later.

Leasing services at "Global Credit".

We have recently started using leasing as a financial tool in our company, therefore leasing services are relatively new for us. Leasing is an additional financial tool to be able to have new customers in one direction, who are relatively "whiter" customers.