5 i a i . m4 at ¥ . wa a : | . . Ne wt 7 Be . ‘4 os a} D 5 4 ah “4 P ad ey os Boo ct a mH" OD at + — a0 + : i wt i . . ol i] oat . at . mm . i) 3 Be ; on &, 5 4 : , ? . ae 7 oe ik mae By JOANNE POOLEY, CA Some pecple have difficulty tween renting and leasing a car. Many rent cars for weekend jaunts or when a bigger car is needed for a wedding. That simply involves shopping for the best deal. The rental firm takes the risk and the respon- sibility for maintenance. But leasing is different. You face a more serious financial — ——— ing from the many leasing ar- rangements in the marketplace and weighing them against conventional bank loans or using capital. Right away you find the main difference is you assume all the risks along with main- tenance and repairs. If you get a lemon, the problem is yours, the same way it would be if you bought the car. Leasing also is for the long term, usually two to five years. The smaller monthly payments and downpay- ments offered result from the longer term and estimated resale value of the car at the end of the contract. This makes leasing seem an at- tractive alternative to bank sorting out the difference be- - decision that involves choos- _ Examine all financial details. before you sign a car lease loans. Bankers want you on the hook with them, so they demand larger downpay- ments. Monthly payments also are larger because bank loans are for three years in- _ stead ofthe longer terms leas- ing companies give. Establish true tale ~ But you should look for the true interest rate in your leas- ing contract. The company isn’t required to disclose it, but reputable ones will pro- vide you with the rate upon request. You will usually find it is higher. Lifestyle and a person’s oc- cupation play a large part in the decision. Many running their own small business lease so capital can be used -. That poses a threat to your for expansion. The lease is not considered a debt which means you can get a larger business bank loan. If you finance, the bank will also at- tach other assets. business if you can’t keep up the payments. If you are leas- ing, you simply turn the car in. and pay the penalty that ran- ges from three months’ pay- ment to the balance due on. the contract. | Leasing can also have some tax advantages, allowing you to write off the entire amount, whereas you can only deduct a set rate for depreciation if you own the car. But there are many kinds of leasing companies and many kinds of leasing contracts. It is an important financial decision, $0 you should shop around to be sure. Leasing may suit your life- style. Many high income people prefer to lease rather than tie up $35,000 to $40,000 in acar. That may be why you see so many sporty cars these days, that cost as much as you onee paid for a house. Joanne Pooley is with Xerox Canada Finance Inc. Leasing business continues | rapid growth, diversification By WILLIAM B. NASE President, Bruncor Leasing inc., Saint John, N.B. Canada’s leasing industry continued on a major roll - through 1989 and there is every prospect of substantial growth in 1990 and beyond, as well as for continued diver- sification in the range of goods and equipment leased to Canadians. . Total receivables outstanding at year-end are estimated: at $12 billion to $13 billion, up from $11 billion in 1988, $9.1 billion in 1987 and $7.8 billion in 1986, Participants are literally all over the map, with probably around 100 companies in- - volved. It’s also an intensely competitive business and rela- tively unregulated. As a result, at the lower end of the scale in terms of size, a number of smaller leasing operations have tended to get in over their heads and fail. This has been particularly evi- dent where newer firms have not set up operating systems of sufficient capacity to handle in- creasing volumes efficiently and »s they have been hit’ by unexpected income tax liabilities. So — caution is. al- ways called for in contemplat- ing any kind of lease. More than half of the players in Canadian leasing are par- ticipants | in | the financial ser- vices industry or offshoots, in- cluding Canadian and foreign banks, trust and insurance companies and their numerous subsidiaries and affiliates. Together, this group accounts for perhaps two-thirds of all Canadian leasing business, primarily because they have ready access to funds and branch structures in place. Other proups are “captive” equipment manufacturing or distributing companies provid- ing leasing as a service to users of their equipment; inde- pendent leasing operations owned privately or by corpora- tions; and lease transaction brokers. There's no question leasing in Canada has come a long way in a relatively short time, and the principle is now established in all parts of the country and even in industries where it was not even a consideration until quite recently, The range and variety of leased goods and equipment is staggering: alarm systems, automobiles, asphalt spread- ers and rollers, backhoes, cranes, computers, dishwash- ing equipment, educational equipment, emergency sys- tems, fax machines, furniture, medical installations, material handling equipment, janitorial equipment, mobile and cellular telephones, office machines, optical manufacturing, shelv- ing and warehouse equipment diversified in the future. _ and transportation. - Perhaps the most innovative leases, and something of a specialty for Bruncor, provide aquaculture cages for salmon breeding. It’s a concept that simply wouldn't have been thought of until very recently. The benefits are clear and most corporations and many individuals now view leasing as a viable alternative to other financing methods. In the first place, many leases can be financed 100 per cent, unlike most other methods. In many cases too, leasing can be benefi- cial from a tax point of view. It can often enable effective ex- pansion of a customer’s line of credit and assist a company’s cash-flow situation. Furthermore, once accepted in principle, many customers now actually prefer leasing to other financing methods for the acquisition of equipment. Apart from anything else, leas- ing is a highly competitive business and we must be strongly service-oriented; un- like some other “lenders”, for example, leasing companies tend to take for granted that we go to the customer's office to make the deal, not vice versa. One way or another, the leas- ing business is now very much part of the Canadian financial . scene and likely to become in- creasingly important and oe See EES Snel slump in 1989 to net of only $3.1 billion Net sales of 1989 Canada Savings Bonds — the amount left after redemptions of earlier issues — were down to $3.1 billion, from $6.5 billion in 1988 and $14.9 billion in 1987, Finance Minister Michael Wil- son has announced. Gross sales were $9.3 billion. A department spokesman said the lower sales weren't seen as enough of a problem to extend the purchase deadline beyond Nov. 1 and were suffi- cient to meet government financing needs. The role of CSBs in covering Ottawa's debt has declined substantially over the past 15 years — from 41 per cent in 1976 to only 19 per cent now. Instead, Ottawa has relied more heavily on Treasury bills. This method is seen as more efficient because administra- tion costs are lower. oH gMatan taraaaan a akaes cance senenaseesmnacaas aoe ALOE OT PN or atcPetvtelghetate satel ater! Spt abedetntd Seta Oat Sah N eer eae Don't be taken by phoney ‘shell banks’ Canada’s legitimate charter- ed banks have warned against a rash of “shell banks” ready and waiting to rob you blind. As the label suggests, shell . banks are usually empty finan- cial entities consisting of no more than an easy-to-get off- shore banking license and one or more mail-drop addresses. While an offshore shell bank is sometimes employed legiti- mately in tax avoidance schemes, the more ambitious of the breed are often outright fraud artists. ‘Official’ cheques may be worthless Some issue their own official ~- cheques, drafts, certificates of ’ deposit and letters of credit and solicit deposit and loan busi- ness from unsuspecting in- dividuals looking for the pro- verbial “sweet deal”. Needless to say, their instruments and promises aren’t worth the paper they’re printed on. These would-be Canadian - banks are commonly incorpor- . ated in one of the Caribbean or Asia Pacific islands. Often, the principals are located in the U.S. or elsewhere and conduct their business from a Can- adian post office box, some- times in Vancouver or Mont- real now those two cities have been designated as interna- tional banking centres. Most complaints have come from Americans who have been offered Canadian deposit and/or loan opportunities at unusually attractive rates of interest. Loans are offered to those who might not gualify from a conventional source, providing a fee or commission is paid in advance. Once the fee is paid, the “shell game” is over and the Ioan doesn’t material- ize. The Canadian Bankers’ As. sociation says some 500 shell operations are known world- wide. 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