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Lease products in cultural, tourism and education areas

1. Product functions

Companies and institutions operating tourist attractions, cinemas, schools and so on in the cultural, tourism and education areas want to buy new equipment with mid-to-long-term financing or want to get mid-to-long-term capital by selling existing equipment which is not mortgaged and then renting it back. 

2. Product profile

When the company or institution (the lessee) in the cultural, tourism or education areas wants to buy new equipment, it make application to China Huarong Financial Leasing (the lessee) according to its specific requirements on the equipment and choice of the supplier. The lessor will buy the equipment and rent it to the lessee. The lessee may also use the equipment (facilities) which it owns and is not mortgaged to make application to the lessor. The lessee may sell the equipment (facilities) to the lessor at a reasonable price in order to get money. Then the lessee sign a lease contract to rent back the equipment (facilities) from the lessor. During the lease term, the lessee pays rent to the lessor. After the expiration of the lease term, the equipment (facilities) belongs to the lessee.

3. Applicable area

It is applicable to companies and institutions operating tourist attractions, cinemas, schools and other the cultural, tourism and education assets when they want to buy equipment, including but not limited to cable cars, cinema facilities, school buses, IT equipment and other complete equipment. If the companies or institutions legally own cultural, tourism and educational equipment and pipeline and network facilities which are not mortgaged, they can sell the existing assets to get mid-to-long-term capital. 

4. Advantages and functions

(1)The lessee gets the equipment it wants in the form of financial lease. It acquires the right of using the equipment with less money. If the lessee raises money through sale and lease back, it can still use the equipment (facilities).

(2)The lessee can allocate the money to more urgently needed usage and will have more flexible finance. The lessee can get the price for selling the equipment (facilities) from sale and leaseback, which can activate its fixed assets quickly, improve asset liability structure and cash flow, resolve capital liquidity problem and increase investment. 

(3)It can improve the short-term solvency indicator of the lessee, improve liability structure, avoid using short-term loan for long-term purpose and improve capital use efficiency.

(4)The rent payment plan customized for the lessee is compliable to the cash flow of the cultural, tourism and educational institutions and makes the cash inflow and outflow of the lessee more stable.

(5)The rent paid by the lessee in installment is recorded as cost. Moreover, the leased asset can be depreciated faster, which has a tax postponing result.

(6)After the lessee pays up all contracted rent, it will hold the ownership of the equipment or the two parties may agree to purchase back the equipment at a lower price.