Lease Bank Instruments Can Be Used For a Variety of Purposes

The trend tends to be towards bank guarantees, especially for retail leases and larger amounts. This is because the process dispenses with the administrative requirements of lodging the security deposit. It has also been argued that bank guarantees are more secure if you go into bankruptcy or liquidation.

However, this does not mean that obtaining a bank guarantee is easy. It may take some time and come at a cost.

Leased bank guarantees tend to be very expensive; fees can run as high as 15% of the guarantee amount every year.

The fee usually consists of an initial setup fee and an annual fee, both of which will be a percentage of the dollar amount that the issuing lease bank instruments in the event that the company is not able to promptly pay its debts.