NAMEL - Leasing

NAMEL Agricultural Equipment Lease is a subsidiary of the Nigerian Agricultural and Equipment Leasing Company Ltd (NAMEL) incorporated as an alternative financial solution provider involved in lease financing for Agricultural Equipment as well as Agribusiness.

Leasing is an arrangement where a lessor (owner / financier) of an equipment contracts to hire the equipment to another called the Lessee over a specified period on payment of specified lease rentals.

Leasing Offers

NAMEL Agricultural Equipment Lease Finance operates the following types of leas

is a lease arrangement where NAMEL Leasing provides Agro-machineries to the lessee over a period with the payment of rentals over a specific period. In this scenario, the lessee eventually owns the property after the expiration of the lease tenor.

NAMEL Leasing assumes the role of a financier so does not take responsibility for the miscellaneous cost of repairs, maintenance and insurance of the equipment which are then undertaken by the lessee.

However, in the case of a default before the expiration of the rental period, NAMEL Leasing can repossess the equipment under the Lease buy back scheme and further lease to another lessee.

NAMEL Leasing is also involved in rendering operating lease arrangement.

In this case, the ownership of the Agro-machineries leased is still with NAMEL Leasing and the equipment will revert to NAMEL Leasing at the expiration of the Lease tenor.

In this scenario, NAMEL Leasing as the lessor, still bears the cost of repairs, maintenance, depreciation, and insurance of the asset.

NAMEL Leasing is also involved in hire purchase transactions. The difference between hire purchase and Leasing is indeed subtle.

Very often, despite a similar modus operandi with Leasing, the tenor of a hire purchase agreement is shorter.

Furthermore, hire purchase is mostly consummated on consumables and less capital-intensive assets usually with individuals as against leasing where capital intensive equipment is handled largely at corporate levels.

This is specifically tailored to financing agribusiness through either of the above types of lease financing/ hire purchase.

Leasing is focusing on financing the agricultural sector especially through mechanization and capacity building to enhance productivity.

This is an arrangement where NAMEL leasing ltd purchases agromachineries from firms and then leases same equipment to the initial owners in an order to finance lessees’ operation and enhance their cashflow position.

Benefits of Leasing

Not sure if you should lease or own it? Well, here are some reason you need to take the lease option

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Tax

The tax benefit applies to both the lessor and lessee. The lessor can claim depreciation as an expense on his account and get tax exemption while the lessee can claim the lease rentals as an expense to also be exempted from tax. Leasing expenses are considered as operating costs making them tax deductible

Avoiding Risks of Ownership

There is 100% financing with only your first payment due at lease signing. Hence, one can avoid investing into the asset, thereby reducing the leverage and thus opportunities of borrowing money stay open for the business.A Lease is an off-balance sheet item.

Reduced Paperwork and Approval Times

Most lease credit decisions can be reached within a short period of time. It usually doesn’t require proof of income or tax returns and as such, it is faster to qualify for.

Favourable Cashflow

One of the greatest things about leasing is that payments related to leasing are spread out over several years, therefore reducing the stress of one-time bulky cash payment. This enables a business to keep a steady cash-flow profile since you can structure payments to complement your cash flow.

Better Usage of Capital

Choosing to lease instead of investing in an asset through purchase allows a company to adequately fund its other capital needs and/or economise money for a wiser capital investment. Your bank credit lines and sources of capital are not tied to an equipment. Rather, they are available for personnel, inventory or marketing openings.

Off-balance Sheet debt

Whilst lease expenses are treated in a similar manner as interest expenses, the lease itself is treated differently from debt. The lease does not appear on the company’s balance sheet because it is an off-balance sheet item.

Better Planning

Lease expenses usually remain constant over an asset’s lease tenure or increase according to inflation rates. This helps in planning expenditure when coming up with a budget

Low Capital Expenditure

Leasing is one of the best options for a newly set-up company because it reduces initial costs and CapEx demands. Unlike the traditional methods of financing, operating lease contracts are mostly not capitalized, thereby improving balance sheet ratios.

No Risk of Obsolescence

For businesses operating in a sector where there are high chances of technology being outdated, leasing generates high profits and saves the business from the risk of spending on a technology that might become obsolete. This considers the fact that high tech equipment is often obsolete within three to five years.

Termination Rights

There is flexibility in the business therefore the lessee has the right to purchase the asset and abort the leasing contract at the end of the lease tenure.