What is a lease?
A lease is a physical financing service by which a lessor purchases a facility selected by a customer and lends it to a lessee and receives lease charges for it.
Objects of lease
All domestic and imported machines and facilities purchased by a customer can be an object of lease, as follows:
Industrial machines and tools, computers, office equipment, construction and transportation equipment, medical instrument, tour and distribution facilities, telecommunication equipment, education / science / technology equipment, pollution prevention equipment, ships and airplanes, other machines and facilities.
Advantages of lease Financing
Since the lessor pays for the entire purchase amount, plus additional charges, the lessee can effectively manage
its fund because it can preserve cash without causing lump-sum payments due to the purchase of goods.
Especially in case of the imported goods, the lessee can acquire a facility without no additional cash, because
the lessor pays even for the tariff, clearance and other charges
The customer with insufficient surety can also use the lease service, because the service availability
is determined by growth potential and credit level, rather than the surety of a customer.
A customer can swiftly acquire the necessary goods, because the lease company handles the entire procedure
of purchasing in a speedy manner, compared to other financial institutions.
A customer can pay the lease charge from the income obtained by operating the leased goods, and easily
handle the accounting treatment and identify the expenses because a fixed amount of lease charge is paid.
The entire lease charge is recognized as expenses. That is, the principle and interest expenditure (for financial
lease, interest expense and depreciation) are recorded as expenses, giving the effect of saving income tax.
What is an Auto Lease?
Auto Lease financial service, by which a lessor (Hyosung Capital) provides the entire money, including vehicle price, public bond, registration charges and taxes, and a customer (lessee) pays lease charge to the lessor every month. Therefore, a customer can use a vehicle without the financial burden of a lump-sum.
Benefits of Auto Lease
Since an Auto Lease keeps the residual value of a car, it is not affected by the drop of a used car price,
and the monthly burden is lower than that of other regular installment-based purchases.
Since the vehicle obtained via Auto Lease is not recorded in the relevant asset and liability account,
the dept-to-asset ratio is smaller than that in case of purchasing a car with a loan.
The lease period (3 years) is shorter than the legal useful life (5 years) of a vehicle. So, the accelerated
depreciation in the initial stage provides a tax saving effect. The entire amount of the principle and interest
expenditure (for financial lease, interest expense and depreciation) is recorded as expenses,
giving an income tax saving effect.
- Since the individual insurance rate is applicable to the Auto Lease insurance, the insurance history is continuously maintained.
Difference between Auto Lease and Long-term Rent
||General vehicle plate
||'허'is indicated on the plate
|Registered under the name of:
||User's insurance history is kept.
||User's insurance history is disconnected.
||Free of VAT
|Treatment after lease expiry
Difference from Rent
||Determined by a lessee (minimum period : no less than 20% of the useful life of a leased goods)
- Advance or post payment in 1, 3 or 6-month units
- Payment by GIRO or automatic transfer
|| Basically, the market interest rate will be applied considering the credit level of a lessee
||In principle, based on the credit of a customer
||Transfer, re-lease or return
A machinery vendor makes a comprehensive agreement with a lease company, and the vendor makes a lease agreement with a customer (lessee) according to the terms and conditions defined in the comprehensive agreement when selling machinery.
- Benefits of Vendor Lease
A vendor can promote sales due to the lessening of the one-time burden to customer and the swift retrieval
of the selling amount.
- This method is usually adopted by the vendor who sells low-priced goods in a great volume.
- Characteristics of Vendor
Hyosung Capital, as a reliable business partner, forms a trustful relationship with vendors.
Hyosung swiftly provides a financial service thanks to our reasonable but strict screening system, so that
vendors may safely and swiftly retrieve the amount, and the lessees will also be satisfied with our lease service.
* These are the numbers for those responsible for each of the business areas.