Lease pricing

Lease pricing is the process of determining the payment amount for leasing an asset. There are two types of leases; Finance Lease and Operating Lease, and you can generate pricing for both types based on the yield that you specify in the Lease Pricing tab or what is specified in the lease rate card.

Components of lease pricing

Lease pricing in Originate is calculated based on two components; the income rate and the fees.

Fees as a component of lease pricing

As fees is a compensation that the lessor earns for executing and servicing a lease application, it is considered as a component of lease pricing.

Different types of fees supported by Q2 Origination

Fees can be a one-time fee or a recurring fee.

Pricing offers generated for lease applications

Pricing offers can be generated in one of the following ways:

• Rate Cards- Q2 Origination provides an inbuilt calculator to price the lease application using a rate card.
  

• Manual Pricing- Q2 Origination provides the flexibility to price a lease manually. The lease repayment amount is automatically calculated using a standard payment calculator based on the financed amount, interest rate, and term entered when the application was created.

Generate pricing using rate cards for a lease application

To generate pricing using rate cards, the pricing method should be selected as Rate Card while creating the lending product. For more information on how to generate pricing manually, see Generate Lease Pricing Using Rate Card.

Generate pricing manually for a lease application

To generate pricing manually, the pricing method should be selected as Manual while creating the lending product. For more information on how to generate pricing manually, see Generate Lease Pricing Manually.

Lease pricing setup

Configure fees for lease applications

You must create fees before generating the pricing for a lease application. You can configure commonly used fees through Fee Definitions and associate those fees with a lending product. For more information on how to define fees and associate those with a lending product, see the following details:

• Create a fee definition.
  

  Note:

  To know about how to create a new fee, see Q2 Origination Administration Guide > Create a Fee Definition.
  

• Create a fee set.
  

  Note:

  To know how to create a new fee set, see Q2 Origination Administration Guide > Create a Fee Set.
  

• Assign the fee definition to the fee set.
  

  Note:

  To know how to assign a fee to a fee set, see Q2 Origination Administration Guide > Fee Set Assignment.
  

• Assign the fee set to a product.
  

  Note:

  To know how to associate a fee set with a lease product, see Q2 Origination Administration Guide >Assign Fee Set to a Lease Product.
  

Standard and non-standard lease pricing

A standard yield is defined as the percentage of return on the financed amount, taking the payment streams into consideration.

A non-standard yield is computed on non-rental expenses incurred or the revenue generated on the payout toward the broker commission and fee receivables such as maintenance fees and documentation fees.

The Financed Amount must be calculated before adding an asset.  If it is calculated after adding an asset, the system displays the error message stating, The Financed Amount has already been calculated.

Seasonal payment

As the name suggests, seasonal payment is a financial solution that enables the lessors to create a customized repayment plan for their lessees according to their business cash flows. This allows the lessees to make larger payments during their busier periods and smaller or no payments when business is quieter. 

Subvented lease

A subvented lease is a type of lease where manufacturers reduce the cost of the lease through a subsidy, usually through the increase of the residual value or the decrease of the interest rate. These subsidies reduce the monthly payments that the lessee is required to pay over the life of the lease.