The Continuing Adventures of the Lessee & Lessor

Blog Lessee and Lessor Adventure 1 | The Continuing Adventures of the Lessee & Lessor
By Ryan Hendrie | 26th August 2014 | 3 min read
The Continuing Adventures of the Lessee & Lessor
It can feel like there are an endless number of options to consider when finding the lessor who will finance your assets.
You are a business who has decided to lease your equipment, machinery, truck fleet, etc. for the first time. Now you have to think about such issues as: how much finance will the lessor provide? How much interest will I be charged? How long will the lease last for? What kind of lease will it be? And so on.

Leasing your assets for the first time can seem like a daunting prospect. With so many different banks and financial institutions in the marketplace offering services to lessees, it can be a nightmare deciding which lessor is right for you. With the right guidance offered by leasing specialists however, you will be able to gradually transition into the leasing market and to determine the best arrangement for you.

When the company has successfully leased their assets, the next challenging step to consider for lessees is how to manage the relationship with the lessor effectively and productively. It is important to remember however that this is a two way street: the lessor must provide the appropriate amount of finance to help your company run its operations. This is not a one-sided relationship where the other half makes you do all the shopping, dishes, etc. There should be no early divorce between the lessee and the lessor.

So begins a beautiful friendship! If everything goes to plan, and you have done your research properly, your business operations will flourish under efficient equipment, the right amount of finance and the most appropriate lease you have selected, whether operating lease or finance lease. The next, important decision a lessee has to make is to decide what to do when the term of the lease is coming to an end. Do they stick or twist?!

The type of lease you selected for your assets will undoubtedly determine whether you want it for the long or short-term. If your fleet of trucks or lorries are still going strong and continuing to pound the roads at all hours, then by all means stick with what you’ve got. However, if you are an IT company and your current model is slowly becoming redundant in the ever-changing computing industry, it may well be time to say goodbye to your current lease and look to new ventures.

It may also be the case that there could be a better deal out there for a lessee. It may be tempting to remain with a current lessor because they have fulfilled the terms of the lease agreement. However, a lessee needn’t be worried because it is not their role but the role of the leasing specialist to find them the best deal. They will use their expert knowledge of the markets and current lessors to once again find the best deal for the lessee. Thus the arrangement starts all over again for the company.

It doesn’t have to be the end however! If your company’s current lease agreements have worked well with your lessor but your assets have a shorter life span, then you may very well stick with the same lessor but opt to create a new but similar lease to the one you had before. In this scenario, the leasing specialist will work with the lessor to craft out a deal which realistically takes into account the life of the asset as well as how this would affect the new rates. In this way the lessee’s operations gain much needed continuity as well as the latest and most cost-effective rates. Rick and Ilsa never had it so good.

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