Frequently Asked Questions

Who does the program target?

The program’s targets leasing companies, government agencies, lessees, potential lessees, and investors.

Why is IFC promoting leasing in Ghana?

IFC’s mission is to promote sustainable private sector investment in developing countries, helping to reduce poverty and improve people’s lives. Leasing has been shown to increase domestic investment in several countries. It is an effective financing mechanism for small and medium businesses, as they can gain use of a productive asset with only an initial cash deposit. Subsequent lease rental payments are made, tailored to the cash flows of the business. Typically these businesses do not have enough collateral or credit history to meet the requirements of traditional bank financing. IFC therefore supports leasing because of its developmental impact.

Can I obtain a lease through the seco-IFC Leasing Program?

The seco-IFC Leasing Program is an advisory services program that does not offer leasing services directly. The program’s objective is to help develop the leasing industry in Ghana, and improve financing options for the country's businesses. One way the program plans to do this is to act as a source of information on leasing for the business community, so it will refer leasing companies and banks involved in leasing to businesses seeking leasing services.

Will the program invest in leasing companies?

One of the program’s objectives is to increase the volume of investment in the leasing industry. IFC will work with financial institutions and other partners to encourage leasing investments. IFC could consider investing in the Ghanaian leasing market through equity and loan financing under established IFC investment criteria.

I have a business proposal, and I am interested in accessing lease finance. What can the program do to help?

The leasing program can refer you to financial institutions with leasing operations. We will also follow up to find out if the banks are able to help you.

Why is price important in leasing?

When you lease, you negotiate a purchase price with the dealer just as you would if you were buying. This key point is not well known and dealers have even told customers that, because it is a lease, price is always full sticker price. This is false.

When you agree on a price with a dealer, and you sign the lease contract, the dealer actually sells the equipment to the leasing company at that price. The leasing company then leases that equipment to you, based on the price given by the dealer. Hence, price becomes the most important factor in what you will pay in monthly payments.

Is the dealer the leasing company?

The equipment dealer acts as an agent for the leasing company so that you do not deal directly with the leasing company until you start to make monthly payments.

The dealer works out the terms of the leasing agreement with you on behalf of the leasing company. For this service, the leasing company usually pays her/him a commission, which adds to his profit on the deal. Once the contract is signed, your relationship is with the leasing company, not the dealer, unless it is an issue with the leased equipment itself.

Can I find my own leasing company?

As a lessee, you have the option and right to look for your own leasing company to find better lease terms than the dealer's leasing companies can offer you. These independents can often arrange to get you an even better price due to fleet purchasing arrangements. The tradeoff is that dealers make it very convenient to arrange for both the equipment and the lease all in a single meeting, and the dealer's captive leasing company can often offer special lease terms to help the dealer move vehicles.

What happens at the end of the lease?

At the end of the lease, the equipment is either sold to the lessee, returned to the lessor, discarded, or sold to a third party.

Should I lease or buy?

It depends on what is most important to you. All of us have different lifestyles and priorities, including the choice of cars and finances. Equipment leasing and buying decisions must be made with those lifestyle and priority attributes in mind. What is right for one person can be totally different for another.

With buying, you pay for the entire cost of equipment, regardless of how long you will use it. However, when you lease, you pay for only a portion of the equipment's cost, which is the part that you "use up.” You have the option of not making a down payment; you pay sales tax only on your monthly payments and pay a money factor that is similar to the interest rate on a loan. With leases, you may also pay extra fees and possibly a security deposit that you do not pay when you buy. You make your first payment at the time you sign your contract. With leasing, you can spend your cash on other business activities such as salary payments, instead of spending a lump sum at once to purchase equipment.