What lies ahead for leasing

What lies ahead for leasing
Posted on May 05, 2009 |

After a break, I thought that I should start up again with my thoughts on where we are now, and what lies ahead.


Leasing at the moment is moving ahead quite well, not as well as pre 2007, but certainly far better than 2008. So that is the good news. The art of running a business is to try and anticipate what the future might come up with, and to prepare for what lies ahead.


No one is sure what lies ahead, but there are indicators of what might happen. With the reforms proposed by the Independent Commission on Banking , it will could cause difficulty in the banks raising the wholesale debt that they will require by the end of 2012. This amount is somewhere between £400 billion & £500 billion.There is a concern that there is not depth in the market to buy all of this debt.


The concequence is that debt will become a scarcer commodity, and as we all know, the price of a scarce commodity always rises. Simply supply & demand.


So why should this be a concern to me I hear you ask. I think that credit could become more limited during the latter part of this year & next year. The cost of credit, I also think will rise accordingly.


Now we come to the nub of the matter, if you are thinking of investing in any plant & machinery of any sort, now is the time to do so for many reasons.


Firstly, with a lease, the rentals are fixed throughout the period of the lease, so no matter what the market might do in the next few years, you have ring-fenced your equipment leasing costs.


Secondly,  there is credit available right now, and is priced reasonably according to risk. So to sum up the old TV game show, “The Price is Right” and  you have fixed repayments throughout an uncertain few years.


From the suppliers point of view, you have a window of opportunity, You and I know that windows always start to close at some point.


I have tried to put the events of the real world into a normal perspective. I would appreciate any comments from anybody. I just hope that this is of help.