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The 3 Types of Lessors [Video]

The 3 Types of Lessors

When it comes to lease agreements, the 3 types of lessors are:
(1) banks
(2) captive leasing companies
(3) independents

Many large banks have subsidiaries that structure leasing arrangements. Banks have an advantage in arranging leases because banks have access to low-cost funds from depositors.

Captive leasing companies (often called “captives” for short) are subsidiaries of a manufacturer or a dealer. For example, Boeing has a subsidiary called Boeing Capital that arranges leases for customers who would like to lease aircraft from the parent company.

The advantage captives have over banks is that a captive leasing company has access to the customer at the point of sale. If you’re thinking of leasing an airplane from Boeing, for example, the Boeing salesperson can have someone from Boeing Capital arrange the lease for you. Captive leasing companies sometimes offer more favorable lease terms than a bank because they are trying to help the parent company sells its products or services.

There are also independent leasing companies that focus entirely on making lease arrangements, but these companies have a declining market share.

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Resources for Accountants

Balance Sheet Basics Explained By A Controller [Video]

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