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Leasiing Life Awards The Finance and Leasing Association

Who would use FARV and why?

By undertaking Residual Value Risk we provide the following benefits to Funders, Manufacturers and Lessees :

 Funder -

 - Cash invested - no financial or asset risk to the funder;

 - Asset Management expertise;

 - No depreciation charges equals improved Profit and Loss;

 - No downside risk to the asset's future value;

 - Capital Adequacy requirements reduced;

 - Ability to negotiate extensions;

 - Lease treated as a loan or Finance Lease.

 

Lessee -

 - Off balance sheet (subject to Auditor approval) - IFRS17 or UKGAAP;

 - Reduced Liability - IFRS16 (from January 2019) and rental does not impact EBITDA (IFRS16 only)

 - Rents deductible for tax straight in line with Profit and Loss accounting (IFRS17)

 - Improved cashflows;

 - Tender panel approach to deliver best practice and market competition

 - One Residual Value provider to the Tender Panel means consistent approach to fair treatments of customers, standard Return Conditions and the Lessee may use any Lessor or Syndicate Bank

 

Manufacturer:

 - Outsourcing of all finance procurement

 - Outsourcing of residual value investment

 - Reduced Risks

 - Balance sheet treatment benefit

 - Ability to book the full sale

 - Remarketing Agreement