LEASING

Introduction and characteristics of leasing

• leasing can be characterized as a rent for the use of
foreign capital

• special form of long-term financing needs of businesses

by a foreign capital as an alternative of purchase

• three important roles in leasing:

supplier lessor tenant

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Introduction and characteristics of leasing
• Leasing companies and supplier cooperates based
on perennial cooperative agreements
• In practice exist many different leasing agreements
based on some criteria:

1. lease transfer ownership to the tenant at the end of the lease,

2. include or not include case in the tenant's lease term assets,
3. duration of the contract due to the length of life of the lease
4. difference between the present value of lease payments in
relation to market value of the rental case

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Forms of leasing

• Operative leasing
• Financial leasing
• Backward leasing

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Operative leasing
• operative leases are usually short-term
• property is re-rented to various tenants during the period of
lifetime of property
• responsibility has a lessor -during the lease maintains the
rented subject, provides service and reparations and
ensures its insurance and other ancillary services
• superstructure of operating leasing: full-service leasing
lessor tenant

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Financial leasing
• financial leases are usually long-term
• relation between supplier, lessor and tenant
• between supplier and lessor (leasing company) is
concluded contract of sale  subject is transferred to
ownership of leasing company
• between lessor and tenant is concluded leasing contract
• responsibility has a tenant
• Methods of realization of
financial leasing :
• Direct leasing
• Leverage leasing

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Backward leasing
• owner of the property dispose its property to the leasing
company  leasing contract  owner obtain market price
of property

• property is physically in the hands of the primary owner

• all risks remain to the lessor and at the end of leasing is the
subject transferred back to the tenant

• to benefits can be included the release of fixed capital and

the ability to earlier satisfy of interests of citizens

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Leasing price
• leasing price is the sum of all payments under the lease term, including down
payment and insurance

• leasing price = purchase price of property + credit interest + leasing margin of

leasing company (profit margin)

• leasing coefficient = total leasing price / purchase price of the leased item
• coefficient = 1,10 total price = 110 000 CZK (=10%)
• price of the subject = 100 000 CZK

• The amount of the lease interest rate depends on many factors, which are crucial:
 the interest rate of refinancing bank loan
 leasing duration,
 interval and regularity of payments,
 increased payments
 purchase price

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Advantages and disadvantages of leasing
Advantages Disadvantages
• that way you can obtain some • relatively high rents
production facilities

• inability to deduct VAT on

• is paid at pre-arranged, usually
financial services for
fixed amounts
passenger cars
• is supported by the state
• higher cost of purchased
• the purchase of the debt is not
assets
required high initial capital

• easy access, lower administrative

complexity and variability

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Leasing in the Czech Republic
• beginning in 70s
• development of leasing market in 90s
• Czech Leasing and Finance Association (CLFA)
• member companies of CLFA funded in 2010 by leasing machinery,
equipment and transport equipment in total purchase price for 47
billion crowns without VAT
• in comparison with 2009 decreased leasing of machinery and
equipment from 32.7% to 21.4%
• continue to dominate leasing of movables leasing of road vehicles.
• share of new passenger cars in the overall leasing of passenger
cars reached 80.6%
• The total volume of leasing grew by 3.5%.
• Most companies offer leasing of passenger cars and commercial
vehicles, vehicle leasing, trucks and operative leasing and others

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Major leasing companies in the Czech Republic
• Operative leasing: ALD Automotive, Archer Sheridan, Arval CZ
• Backward leasing: Business Lease, Credium, GMAC
• Leasing of passenger cars and commercial vehicles: Agro Leasing, ALD Automotive, Archer
Sheridan
• Leasing of used cars: Agro Leasing, Credium, ČSOB Leasing
• Leasing of machinery and equipment: Agro Leasing, Bohemia, Credium,
• Leasing of agricultural equipment and machinery: Agro Leasing, Bohemia, ČSOB Leasing
Company Mil. CZK
The table shows the largest
ČSOB Leasing 13667,31
leasing companies in the 1st
3rd Quarter 2008 according CETELEM ČR, a.s. 9016,51

to initial debt UniCredit Leasing CZ, a.s. 9014,7

GE Money Multiservis, a.s. 8546
Home Credit a.s. 7320,74
ŠkoFIN s.r.o. 6931
VB Leasing CZ, s.r.o. 6830,67
SG Equipment Finance 6420,27
s.r.o.
Deutsche Leasing ČR, 4025,03
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Conclusion
• in the Czech Republic still exists the interest in leasing, but the leasing
companies have currently the biggest revenues from consumer loans, which
show a significant increase

• growth of leasing in the case of movables leasing of road vehicles

• abandonment of less strategic markets such as Eastern Europe and vice

versa would be appropriate to focus on mature markets in Germany, France
and Great Britain

• the Czech Republic also mounts to the structure of the European Union,
which could lead to an increase in operative leasing for entrepreneurs

• in the future, can be also expected a change in the composition of

commodities, which are the subject of leasing

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References
• BMC, 2010: Bmcfinance.cz [online]. 2010 [cit. 2011-04-01]. Leasing. Accessible from WWW: <http://www.bmcfinance.cz/slovnik-pojmu/>.
•
• ČLFA, 2009a: Clfa.cz [online]. 2009 [cit. 2011-02-23]. Charakteristika leasingu. Accessible from WWW: <http://www.clfa.cz/index.php?
textID=40>.
•
• ČLFA, 2009b: Clfa.cz [online]. 2009 [cit. 2011-04-04]. Komoditní leasingová nabídka členských společností. Accessible from WWW:
<http://clfa.cz/index.php?textID=43>.
•
• ČLFA, 2010a: Clfa.cz [online]. 2010 [cit. 2011-02-23]. Zpráva o stavu a vývoji nebankovního leasingového, úvěrového a factoringového
trhu v ČR v r. 2010. Accessible from WWW: <http://www.clfa.cz/index.php?textID=64>.
•
• ČLFA, 2010b: Clfa.cz [online]. 2010 [cit. 2011-04-01]. Výsledky ČLFA za rok 2010. Accessible from WWW: <http://clfa.cz/index.php?
textID=71>.
•
• Finance, 2008: Finance.cz [online]. 2008 [cit. 2011-04-01]. Leasing podle nového zákona o DPH. Accessible from WWW:
<http://www.finance.cz/zpravy/finance/207561-leasing-podle-noveho-zakona-o-dph/>.
•
• Finance, 2011: Finance.cz [online]. 2011 [cit. 2011-04-01].Leasing má své výhody i nevýhody. Accessible from WWW:
<http://www.finance.cz/zpravy/finance/94413-leasing-ma-sve-vyhody-i-nevyhody/>.
•
• Komárková, 2008: KOMÁRKOVÁ, Jitka. POROVNÁNÍ ALTERNATIVNÍCH FOREM FINANCOVÁNÍ. Brno, 2008. 79 p. Diplomová práce.
Masarykova univerzita v Brně. Accessible from WWW: <http://is.muni.cz/th/73767/esf_m/Diplomka_Komarkova.txt>.
•
• Séverin, 2010: SÉVERIN, Eric. Self organizing maps in corporate finance: Quantitative and qualitative analysis of debt and leasing.
Neurocomputing. 2010, 73, 3, p. 2061-2067 .
•
• Ulrich, 2004: ULRICH, Milan; PFEIFEROVÁ, Daniela. Bankovnictví. Praha : CREDIT Praha, 2004. 264 p. ISBN 80-213-0815-X.

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Thank you for your attention!

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