Chapter 34: Leasing and Guaranteed SME credits

Question 1

Leasing

Answer 1

Medium-term credit product for concrete objects (think airplanes or computers)

Lease company makes object available to user for a predetermined period for a fee

Question 2

Financial Lease

Answer 2

= Buying in installments
Lease company pays supplier the full amount for object, lessee uses object during period + pays for repairs etc

User acquires object after final istallment, cannot be sold beforehand

Question 3

Operational lease

Answer 3

Hiring object from a lease company
* lease company owns object
* costs/mainainance are with the lease company
* Given back after period

Question 4

Interest and Commission

Answer 4

IR is based on current market IR at time of loan taken out
+ signing fee

Question 5

Guarenteed SME credits

Answer 5

Bank can ask government to provide a credit guarentee for SMEs who do not have enough security in form of suretyship
Reduces risk for the bank
For SMEs with less than 250 employees