A financial institution predominantly engaged in the business of originating and underwriting lease transactions is a leasing company.  Leasing companies come in the form of bank lessors, captive lessors and independent lessors and in all sizes – from small local rental stores to huge international finance companies and, together with lease brokers, act as lease originators in the varied markets for lease assets.  They provide leasing in the form of short-term rentals to very long-term capital leasing of equipment and real estate, from the micro-ticket leasing of hand tools and white goods to the syndicated big-ticket leasing of aircraft, marine vessels and plants.

5 Largest US Equipment Finance/Leasing Companies 2010
Rank Company Net Assets (mn)
1 GE Capital 131,217.3
2 International Lease Finance $38,593.8
3 Banc of America Leasing $34,749.0
4 Wells Fargo Equipment Finance $27,826.0
5 Caterpillar Financial $25,679.0
Source: Monitordaily

The party in a lease transaction that originates and negotiates the lease, arranges the marketing and sale of a lease’s debt and any equity components and executes the lease’s assignment to lease funders is the lease originator.  Lease origination is the process of procuring, developing and closing new lease transactions, it including the prospecting for new lease business, pricing potential transactions, credit review and transaction documentation.  Lease origination is performed either directly by the underwriting lessor – through the vendor programs of bank and independent lessors and the captive lessors of manufacturers and dealers – or by third-party brokers, who bring lessees and lessors together and have no continuing involvement in the transaction after the closing.

New Business Volume by Origination Channel 2012
Vendor
Program		 Captive
Programs		 Direct Third
Parties
New Business Volume (bn) $10.4 $36.5 $33.3 $25.4
Year-on-Year Change (2011 to 2012) 14.1% 10.9% 21.3% 24.2%
Source: White Clark Group

The profitability of individual companies depends on the merchandising mix and cost of financing rental inventory.  While large companies have economies of scale in buying equipment and multiple outlets to share equipment, small companies compete by providing specialty products for a local market and offering superior customer service.  According to Hoovers in an excerpt from its Commercial & Industrial Equipment Rental & Leasing Report, the US equipment leasing industry is concentrated, with the top 50 companies accounting for about 55% of revenue.

Related Items