CIT Latin America, Mexico designs customer financing programs for equipment suppliers in a wide range of industries. We work with our clients and suppliers to reach the best solutions based on their particular needs.
Our two principal products are true leases and financial leases.
Operating Lease
The operating lease allows the customer the “USE” of the equipment during a determined period, without having the obligation to purchase it and making easier the process of technological refreshment. Under this figure, the customer transfers 100% of the risk of technological obsolescence to CIT and all the costs of this process. At the end of lease, the customer has three different alternatives:
- Return the equipment and make a technological refresh.
- Renew the contract over the same equipment for the term of their convenience. Payments in most cases reduce depending on the term of the renewal.
- Buy the equipment for the Fair market value.
Operating leases have been offered through the Arrendadora Capita Corporation, S.A. de C.V., since 1994.
Finance Lease
A Finance Lease is a contract in which a financial company gives to the customer the right to use an equipment with the payment of a rent in the term and conditions defined for both parts. The customer could buy the equipment using a purchase option defined in the contract.
The main and most important difference between a Finance Lease and Operating Lease is that the Finance Lease has a defined purchase option in the contract that usually is of 1 percent. The Operating Lease allows the customer to buy the equipment, but the purchase option will be defined for the Fair Market Value at the end of lease. The laws do not allow in an Operating Lease to determine the purchase option at the beginning of the lease.
There are also some tax differences between Operating and Finance Leases. In general terms, in Operating Leases, the full amount of rentals are tax deductible. In Finance Leases, this is not always the case. If you need further information about the tax treatment, please contact us.
Financial Leases have been offered by CIT through The Capita Corporation de Mexico S.A. DE C.V. O.A.C., since 1995.