What Are the Changing Trends in the Canadian Lease Financing Industry?

The Canadian Finance and Leasing Industry is a major driver in the Canadian economy. Let us look at some of the changing trends in the industry and how they might affect Canadian business owners seeking long term equipment financing.

First of all the lessor and lender borrower base has changed significantly over the years. Canadian businesses should be aware that there are over 190 + lease and asset based lenders in Canada. That’s a lot to choose from. Our point is simply that the well informed business owner should be aware of the breadth of lender in the equipment financing marketplace, both geographically and by financing ‘ niche ‘.

Whether a customer wishes to finance machinery, equipment of vehicles there is a much broader range of financing choice for the consumer – probably more so in recent years given that many specialty type lenders have emerged in different market segments. There is a large breadth of size of lenders/lessors as a key trend in the industry has been merger and acquisitions. A number of major M & A deals have been executed in the Canadian industry. We hasten to add it might be still a little early to determine whether these alliances have been successful and how they will affect the Canadian business borrower. Many firms have learned to ‘stick to their knitting ‘and have returned to their core business.

Another significant trend is the fact that the average Canadian business borrower is more informed and selective when choosing a financing partner. Customers are more knowledgeable about key areas such as lease benefits, taxation advantages, and their right and ability to negotiate special lese terms and options. This trend has of course forced the industry as a whole to be more competitive and customer focused.

Another major trend in the industry, which has been a boon to the Canadian business borrower, is simply the additional financing products available. Leases with tax oriented advantages are available, and many borrowers in areas such as technology and heavy equipment have migrated toward the use of operating leases. We feel different lease products will continue to evolve. Another major trend in leasing is the ‘full service’ type lease where a number of different products such as service, maintenance, and insurance are bundled into the transaction.

A trend that continues to be in force is the emergence of a stronger base of consumer leasing, particularly in the vehicle industry. Most of us as keenly aware that over 50% of autos purchased are financed.

We often hear about the debate of ‘Does Size Count ‘. The trend towards larger leasing companies in some key market areas has made rates and terms and structures exceptionally attractive to the Canadian business borrower.

Specialization is one of the strongest trends in the industry. It therefore behooves the borrower to understand who are the specialists in the market segment in which they require financing.

Despite a proliferation of online leasing portals, applications, etc. a continued trend continues to be customer service and flexibility and relationship building – that being the focus of many of Canada’s more successful lessors.

In conclusion, there are a number of changing trends in the Canadian lease equipment financing industry. These trends have driven creativity and service, providing a generally positive environment for the Canadian business lessee.

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