iSPECIAL MOBILITY ECOSYSTEM
Car Leasing Business Model
Foreword: In 1959, Charles W. Steadman stated: "[This] leasing activity is confined almost entirely to the United States. It is a peculiarly American answer to the problem of the lack of adequate resources...." Mr. Steadman attributed this peculiarity to "rising costs and the inadequate depreciation policies of the federal government's tax program."
Many Organizations and/or Individuals prefer leasing to buying because it allows one to drive a New Car by making periodic payments without necessarily having to constrain their cash flows by making a lump sum upfront payment to acquire the subject asset. Primarily the lessee has the option to either execute a Finance Lease or an Operating Lease; the distinction between the two is that whereas the former offers the option to purchase at the end of the term, the latter quite often does not.
The acquisition of a recent and dependable fleet entails a number of time and resource consuming procedures which one would rather avoid if there was an alternative.
According to Godfrey Jjuuko, the Executive Chief Consultant and Settlor, iSpecial Mobility, a majority of clients exercise the option to execute Operating Leases owing to the very low monthly rental payments which are premised on the depreciation attributable to the lessee over the usage period. The above depreciation is determined by categorizing the users broadly into three bands viz. Low, Medium and High Usage.
The key aspiration on our part (iSpecial Mobility) is to conserve the clients liquidity by leveraging the economies of scale and by so doing strengthening their potential for competition and make the attendant savings in expenditure of resources that are reputed for being scarce.
Leasing Guidelines and Definition
Jjuuko defines a lease as an agreement between the owners of the asset (the lessor) and the prospective or current user of the subject asset (the lessee), in accordance with the agreement, the lessor transfers the use (but not the ownership) of the asset to the lessee.
He says the lessee in turn compensates the lessor for the use of the asset, usually in the form of rent and after a predetermined period of use ( lease term), which should not exceed the asset's economic life – the lessee returns the asset to the owner.
Types of Leases
According to Jjuuko, there are many types of transactions referred to as leases some of which , from a legal standpoint, do not constitute into being leases. The two main types of leases are Finance Leases and Operating Leases.
"The Whole Business Securitization Ecosystem entails a simultaneous execution of the Finance and Operating Leases to the benefit of the iSpecial Mobility End User. As iSpecial Mobility, we are a leasing Special Purpose Entity (SPE) independent of the manufacturer or Supplier AND act as a catalyst in the financing function to the benefit of the End User." ─ Godfrey Jjuuko
DALIFA Trust Holdings Limited (DTH) acts like a master trust in that the notes issued by DTH are typically backed by a shared revolving collateral pool consisting primarily of vehicles. Notes are issued by DTH in one or more series, each of which may have one or more classes of notes with fixed and/or floating rates of interest.
Further, Jjuuko asserts that pursuant to a master motor vehicle operating lease, DTH leases the vehicles it owns to iSpecial Mobility (SPE) and in turn iSpecial makes a monthly lease payment to DTH which is sized to cover Interest, Vehicle Depreciation and other Transaction Expenses. At the tail end, iSpecial Mobility uses the vehicles to execute ride-hailing, hire, rent and lease services in its domestic and international markets. "The prospective End User should only have demonstrated a profitable historical operation and ability to meet its financial obligations," he said.
He says vehicles are maintained to the highest possible standard as prescribed by the Original Equipment Manufacturer (OEM).
Highlight: Operating lease terms and conditions
- The Lessee will be responsible for the payment of the first 10% on any insurance claims involving the leased vehicle;
- The monthly lease rate includes complete routine servicing not to mention the mandatory first service for new vehicles that takes place at the initial 1,000 kilometers;
- Repairs that a result of normal wear and tear are covered under the Operating Lease rate;
- iSpecial Mobility guarantees a replacement vehicle in event that the leased one is turned in for service or repairs.
Further, iSpecial Mobility subscribes to the stellar International 40 points benchmark check list on all leased vehicles after completion of service or repairs prior to delivery of the motor vehicle to the customer so as to ensure that all vehicles are in excellent condition at all times. The iSpecial Mobility services entail the Top Tier League - Car Lease Industry rule of thumb that under normal circumstances the car should not be moved until permission for the same is given by its vehicle maintenance specialists.
The length of the lease period depends on a predetermined end of the economic useful life predicated on the Environmental, Social and Governance (ESG) international benchmarks applicable in the iSpecial Domestic Market and the usage options at the disposal of the End User as dictated by own (lessee) cash flows and peculiar preferences. The Rental payments are monthly and payable in advance starting immediately after delivery of the leased vehicles or as shall be mutually agreed on a case by case basis.
Before iSpecial Mobility undertakes to order for the vehicle to be leased , the lessee shall deposit a sum equivalent to 0-30% of the acquisition value which depends on a credit evaluation matrix premised on benchmark parameters supported by Artificial Intelligence (AI). The motor vehicles shall always be fully insured by the lessee.
Further, iSpecial Mobility shall provision for a cost recovery of the regular maintenance and repair of the leased motor vehicle/s that shall be clawed back from the lessee as recommended by the manufacturer and the attendant Total Cost of Ownership (TCO) matrix predicated on the Lessee usage portfolio.
Concluding Remarks
The iSpecial Mobility Ecosystem seeks to facilitate the Domestic Market Taxpayer Conservation of Cash; Tax wise financing of the required motor vehicles to conduct Business/Private Operations; Concentration of the available limited funds towards execution of Core Revenue/Income Generating Activities at the Disposal of the End User; Steering clear from the Risk of Obsolescence arising from Outright Private/Public Vehicle Ownership, And the attendant lack of In-Usage and/or Post-Usage ACRISS and/or DISPOSAL Flexibility to match the taste of a discerning End User. The above is accomplished by offering the End User a range of services that include: Ride-hailing Fleet Services intermediated by independently accredited and aggregated Bailees within the proximity of the End User; Hourly, Daily, Weekly, Fortnightly, Monthly Car Rental Services AND over One Year to Eight Years Vehicle Operating Lease Payment Terms predicated on iSpecial Mobility economic usage bands at the disposal of the End User.
By: iSpecial Mobility - DALIFAiSPECIAL Business Reporting Team
