In this constantly changing financial landscape, savvy investors are increasingly looking for smarter ways to maximise their returns.
Asset leasing is an alternative investment that has gained immense traction of late.
Whether you are a seasoned investor looking for a fresh perspective or a newcomer wanting to explore new avenues, this alternative investment can be a great option. Let us dive into the basics of asset leasing, how it works, and its benefits in detail in this article.
For the longest time, the term ‘Leasing’ was used only in terms of real estate. We must have heard our parents discussing leasing out properties and we interchangeably use ‘renting’ and ‘leasing’. But what is asset leasing exactly?
Leasing is an agreement between a lender, the lessor, and a borrower, the lessee. The owner of the asset, typically an individual or a company, leases the asset to the borrower for a specific period and at a certain cost. The lessee is provided exclusive use of the asset in exchange for periodic payments throughout the agreed-upon lease term.
Let us clarify: this investment option has existed for quite a while; it is not a new product. However, earlier, it was only accessible to certain high net-worth individuals (HNIs) or institutional investors.
In recent years, asset leasing has emerged as an attractive, fixed-income and new-age option for retail investors through platforms like Grip Invest.
Nowadays, quite a few platforms in the market provide exposure to asset leasing. Two of the popular models they follow are explained below:
The structure looks somewhat like this:
In simple words, the “originator” (usually an NBFC) owns the asset and leases it to the Lessee(s), who then makes the monthly interest and principal repayment to the originator. The returns are then distributed to investors in proportion to the amount invested.
All this is managed and monitored by an independent SEBI registered trustee, making the process secure!
LLP Model Of Asset Leasing
The SPV then purchases an asset, such as equipment, for use by the company it invests in. This investment is leased back to the company at a predetermined rate of return. All the partners in the vehicle receive lease payments from the asset in proportion to their ownership stake.
Asset leasing offers companies a cost-efficient and convenient way to access the latest technology and equipment. Using this option, businesses can enjoy significant savings while ensuring access to the best possible resources. Here are three reasons why companies choose to lease:
In conclusion, asset leasing can be a great addition to your portfolio if you seek stable returns and diversification. However, do not forget that every investment comes with its own risk. Analyse the investment carefully and select the one that best aligns with your portfolio, financial goals and risk tolerance. Explore Grip Invest and discover various asset leasing investments to diversify your portfolio.
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Disclaimer - Investments in debt securities are subject to risks. Read all the offer-related documents carefully. The investor is requested to take into consideration all the risk factors before the commencement of trading. This communication is prepared by Grip Broking Private Limited (bearing SEBI Registration No. INZ000312836 and NSE ID 90319) and/or its affiliate/ group company(ies) (together referred to as “Grip Invest”) and the contents of this disclaimer are applicable to this document and any and all written or oral communication(s) made by Grip Invest or its directors, employees, associates, representatives and agents. This communication does not constitute advice relating to investing or otherwise dealing in securities and is not an offer or solicitation for the purchase or sale of any securities. Grip Invest does not guarantee or assure any return on investments and accepts no liability for the consequences of any actions taken based on the information provided. For more details, please visit https://www.gripinvest.in/.
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