Leasing
An alternative means of financing equipment for businesses i.e. machinery, business cars, computers, trucks, buses etc . A lease is a contract between the owner of an asset (the lessor) and another party (the lessee). This contract gives the lesee access to;
- The lessee possession and use of a specific asset in return for payment of specified rentals over an agreed period of time.
- The lessee selects the equipment and negotiates its price and the lessor purchases it for the former to use.
Benefits of leasing
- Medium term financing as maturity can be up to 5 years
- The lessee incurs minimum capital outlay required since the lessor finances the majority of the capital expenditure
- The lessee claims the full rentals as an expense against taxable profit
- VAT payment is spread over the lease period. If registered, the lessee is able to claim the VAT paid with the rentals from RRA.
- Cash flow budgeting is made easier because of the fixed and equal nature of the lease rentals.
- A lease facility can be specifically structured to match the lessee’s cash flows.
Size of facility
Generally between RFW 5MN and RWF 300MN . Transactions outside this range may be considered .
Lease currency
Facilities can be provided in Rwandese Francs or US Dollars to match the income stream of the lessee.
Selection of equipment
The lessee identifies the equipment and supplier, as well as negotiates the price and terms of supply. The terms and conditions of supply should be acceptable to BCR.
Ownership
As the main guarantee in the contract, the Bank shall retain ownership of the equipment for the duration of the lease and will only transfer to the lessee at the end of the lease term upon exercising and fulfilling the terms of the purchase option.
Insurance
The equipment shall always be comprehensively insured by the lessee against all risks and in such a value as BCR reasonably requires.
Maintenance
The Lessee is required to maintain the leased asset in good working condition during the lease period, as recommended by the manufacturer.
Repayment period or lease period
Normally between 2 to 5 years depending on the nature and useful life of equipment financed as well as the lessee’s own anticipated cash flow.
Guarantees
The leased asset is the primary guarantee; In exceptional circumstances, additional guarantees may be required.
Pre-delivery interest
Finance charges accrued between disbursement and delivery are added to the cost price of the asset.
Nature of equipment
Any asset of a durable and identifiable nature can be leased. Examples are tractors, factory equipment, machinery, generators, trucks, buses, medical equipment etc.
Value Added Tax
The amount financed is net of VAT as the lessor claims VAT on cost of equipment. The lessee however pays VAT on monthly rentals over the lease period.
Option to purchase
At the end of the lease period, the lessee shall purchase the asset for a nominal fee determined at the inception of the lease.
For more info contact:
Phonebanking: 3227/227
Email: info@bcr.co.rw ;leasing@bcr.co.rw
Or visit your nearest local branch
