What is leasing and to whom is it given? Leasing: what is it in simple words
Hello, dear readers of the blog site. The definition of leasing is quite simple - it is long-term lease with option to buy(from English to lease - rent, lease).
But the first unspoken rule of economics is: the simpler something looks, the more they try to deceive you. Therefore, without further ado, let’s move on to analyzing the pitfalls and specific features of this type of financial transaction.
What is leasing in simple words
Not everything is always profitable and can be purchased immediately by paying the full price. Anyone who has ever taken out a loan or... will tell you this. You may simply not have the entire amount, or you consider it more profitable to invest money in something else, but some things. In general, it’s not for me to explain to you what a loan is and what it’s used for.
Leasing (financial) — this is the same loan, but with its pluses and minuses (I’ll talk about them in detail below). This service is very widespread in the world (almost half of consumer goods are purchased using this scheme). In our country, everyone has more or less heard about car leasing, and about commercial options for this type of transaction (an airline received airplanes in this way, an LLC leased a fleet of cars, etc.).
In general, this is practically a loan, but not in front, but in profile. What's the difference? Well, you can only lease non-consumable goods (food is not allowed, gasoline is not allowed, etc.). True, this is if we are considering the so-called financial leasing, but there is also operational leasing. Confused? Me too. Let's go in order.
Operational leasing- pure rental. You need a grader for a couple of years. No problem. Take it, pay the subscription fee and use it. Then you rent it out or renew it. It is very rare when the lessee buys out the entire property.
Financial- this is the same “almost loan.” There is an object (truck, car, sofa, washing machine). There are sellers of these objects. There is a lessor - he will buy the object you need at the best price among the sellers, and you will already pay him for the object in installments (like a loan). You, of course, are a lessee who, after three years (for example) of monthly payments, will receive ownership of this object (truck, car, etc.).
Looking ahead I will say that lysine is especially beneficial for businessmen, because it allows you to reduce the tax burden. How? See this at the end of the post. For ordinary consumers, it is not always a better solution than a loan. But this is an alternative, and as demand grows, conditions will improve and this service will benefit more and more people.
On the plus side. It is easier to obtain than a loan (the likelihood of approval is greater, since the object remains the property of the lessor until full redemption). The price of the property may be lower than if purchased directly from the owner (leasing companies are usually provided with volume discounts). Commerce benefits from taxes.
Cons. For ordinary consumers, the property most often costs more than with a loan. Not the entire range of goods that can be borrowed is on the lists of lessors.
But in any case, this is another very interesting (and for many, very profitable) and convenient tool that allows get something without having the full amount in hand.
I will say more, businesses often use reverse leasing to get cash for their own objects (for example, transport), handing them over to the lessor, and then they themselves rent them from him. It’s a nightmare to get tangled like two fingers... But now we’ll break it all down for you in detail.
Interesting: Alexander Bell, the inventor of telephones, was the first to introduce commercial leasing. He intended to transfer the devices to other people solely on a rental basis, however, the state prohibited him from doing so at the legislative level.
Introduction and some terminology
In this article, leasing will be considered from two points of view: a private person and. As already mentioned, leasing has a whole bunch of nuances hidden in clerical terms. To avoid misunderstandings in the future, let's consider some of them:
- Subject of leasing
The item is actually what is being rented. It can be anything (car, equipment, building), except natural objects. The latter include land plots, parks, forests and water areas. - Lessor- a leasing company, of which there are now a sea.
- Lessee- you personally or your company.
- Price increase rate
When issuing a lease, the fact is taken into account that an item issued for a long-term lease will rise in price throughout the payment period. Typically, the lessor adds the difference in price not directly, but as part of the interest rate. This part is called the appreciation rate.
In production: gradual transfer of the cost of wearing equipment to the cost of products. In practice, it looks like this: there is a machine worth 50,000 rubles, on which you can produce 50,000 units of goods in 5 years. To recoup the cost of the machine, the manufacturer adds an average of 1 ruble to the price of each unit of goods.- Redemption value
As we remember, this is a lease with an option to buy. Most often, leasing payments are calculated in such a way that by the end of the contract the lessee remains to pay one percent of the total cost of the goods. This one percent is the redemption price.
These were the basic concepts on this topic that you might stumble over. Of course, in reality there are more of them, therefore, as the thought develops, additional explanations will be encountered, but for a start this will be enough.
Consumer leasing
Consumer leasing is the purchase of something (essentially on credit) by a private individual for personal use. Most popular item - automobile, so without wasting any time, I will explain what it is in simple words using a specific example.
The process of leasing a car
Let's consider the process of buying a car for one million rubles on lease for 5 years (for a washing machine, for example, the process is identical) at 12 percent. It consists of four stages:
Important: the payment amount and interest may not coincide with actual market offers. They are taken for clarity and ease of calculation.
Consumer leasing vs. credit
To begin with, it’s worth comparing the strengths:
Credit | |
---|---|
Lower cost. Leasing companies purchase consumer goods in bulk and, accordingly, receive a discount on them. This results in a lower price, which, however, is offset by a higher interest rate. | High flexibility. Buying on credit appeared on the market earlier than buying on lease. Accordingly, banks have more experience working with loans, which, in turn, means a wider range of possible payment options. |
No red tape. When purchasing the car mentioned above, the lessee will not have to register the car, insure it, or personally pay fines and transport taxes. The lessor includes all these expenses in the price and deals with them independently. | Ownership. When purchasing something on credit, the client receives ownership after the first payment. This makes the payment process more comfortable from a psychological point of view. |
Possibility to change goods. Leasing is rent. Accordingly, no one bothers you to “test” one product and then replace it with another. | Higher availability. Relatively speaking, loans are distributed everywhere and for everything. Therefore, the likelihood that the product you like will be available on credit is higher than that it can be leased. |
Let's immediately look at the disadvantages of both types:
Credit | |
---|---|
Larger one-time payment. The cost of leasing services, in addition to the price of the product itself, includes maintenance and some operating expenses. In the case of a car, this is at least registration and insurance. | Start-up costs. When purchasing something on credit, the client does not receive additional services. Using a car as an example: you have to register, insure and pay fines yourself. |
Lack of ownership. Until the redemption, which can only be done after payment of 99 percent of the amount, the leased asset is the property of the lessor. The legislation provides for the seizure of the object in case of significant delays. | Lack of support from the lender. The lessor supports the buyer in every possible way during the contract. The lender, having transferred the goods into the ownership of the buyer, completely waives any costs associated with operation. |
Difficulties with early repayment. The possibility of early repayment is determined individually, but in most cases the lessee can buy the goods only after the debt has been repaid. | Higher requirements. Lenders select clients more carefully because their risk is higher than that of lessors. This means that to obtain a loan you will have to spend more time and collect more documents. |
If we summarize the above, we can come to the following conclusion: leasing is a more flexible type of transaction that is easier to complete. In addition, the lessee enjoys support from the lessor and additional services.
From another point of view, a loan is a common and cheaper type of transaction, which also provides ownership rights and the possibility of early repayment of debt.
When choosing between a loan and leasing, it is worth considering the following aspects:
- Willingness to make an initial contribution.
When buying on lease, you will have to pay up to fifty percent of the cost of the goods in advance. - Flexible use or ownership.
It is important to determine what is a priority: additional services and the ability to change goods or stable ownership after the first payment. - Willingness to overpay for comfort.
In simple words, leasing is a loan for a wealthy person who is willing to pay a small (percentage) difference for the comfort of use, additional service, the right to choose and support while paying off the debt.
Leasing for commercial campaigns
Before entering the consumer market, leasing, as a form of financial activity, spread throughout the industry. In addition to the advantages mentioned above, a company that takes something into this type of long-term lease receives the following advantages:
Interesting: leasing is one of the most developed types of financial transactions in developed countries. Up to 40 percent of investments in the economy in Europe and America come from it.
Types of leasing payments
Here again, everything is almost the same as in the case of loans. All types of payments are the same for individuals and entrepreneurs, so it makes sense to consider them immediately:
- Regressive
With regressive payment, the debt is repaid in equal parts, and the interest rate is calculated depending on the remaining debt. Thus, the first payments are more expensive, but the last ones are small. - Annuity
The entire loan amount (debt + interest) is divided into equal parts. The payment amount does not change throughout the entire repayment, but the first payments are almost entirely used to pay off interest, which makes early repayment unprofitable. Due to the accessibility and simplicity of calculations, the annuity payment is the most popular of all. - Seasonal
Possibility of seasonal payments – enterprises. The lessor, based on the company’s profit data, can distribute the amount so that large payments will be made during the season of high revenues.For example, an organization that sells air mattresses will pay more in the spring and summer, and one that sells cough syrup will pay more in the fall and winter.
Results
As I already said, leasing is a long-term lease, usually with a subsequent right of purchase (sometimes there is a pure lease). Let's look again key points regarding this service:
- Like a loan, it can be repaid using the annuity and regressive method. Seasonal payments are also available to corporations.
- Can be roughly divided into consumer and commercial (industrial).
- More convenient than a loan, but you have to pay more for it. Although for merchants the latter is compensated by significant savings on VAT
This is perhaps a fairly detailed explanation of what leasing services are. More detailed information about the conditions and amount of payments can always be obtained from your lessor.
Good luck to you! See you soon on the pages of the blog site
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Hello, dear readers of the financial magazine “site”! In this issue we let's talk about leasing: what is it, how does it differ from a loan, what are the advantages and disadvantages of leasing, what types of leasing exist, and what is more profitable - leasing or a loan.
It is no longer something unexpected or original for anyone to purchase something using borrowed funds. , loans from commercial organizations have firmly entered modern life and are an important component for the formation and active functioning of the market.
The article is devoted leasing agreements , which in Russia are most often concluded when implementing entrepreneurial activity. This is due to the fact that the acquisition of property on lease by organizations and persons not engaged in commerce has become possible relatively recently. But in some cases, purchasing something through leasing can be more profitable and convenient.
Leasing is a modern financial instrument, so information about the types of leasing and its differences from other credit products will be useful to car enthusiasts, entrepreneurs, as well as those who are just planning to open their own business using borrowed funds and equipment. We have already written in separate articles about starting from scratch and where you can get it without collateral.
But how to use leasing services more conveniently and profitably will be discussed in this publication.
Leasing: definition and concept of the term, types and forms of leasing, main differences from credit, advantages and disadvantages
Literally the term "leasing" translated as "to rent out" , but the main difference between a leasing operation and the usual provision of property for rent is possibility of subsequent redemption of the used property, taking into account the payments made .
Leasing is a form of lending, in which certain property is provided for temporary use and possession for a fee.
1.1. Subjects and objects of leasing relations
The subjects of the leasing operation are:
- lessee– an individual or legal entity who receives the opportunity to use any property under the terms of a leasing agreement;
- lessor– credit institution, legal entity, as well as individuals providing leasing services;
- insurer who insures the transaction and (or) the transferred property;
- property supplier– seller or manufacturer of certain equipment, dealer, property owner.
Lessee And lessor are obligatory participants in the leasing agreement and represent the main parties to the agreement.
Insurance of the transaction and the property itself leased is carried out at the discretion of the lessor; the terms of insurance, its cost and volume are determined by agreement of the parties.
The lessor may be the owner of the transferred property, or may only provide the service of transferring property for temporary use from the supplier to the lessee.
Object of leasing relations Almost any non-consumable property can be used (with the exception of land plots and other natural objects, as well as items whose free circulation is limited or prohibited).
These could be:
- structures and buildings;
- equipment, production lines;
- enterprises;
- transport for various purposes;
- other property in the use of which the lessee is interested.
1.2. What is the economic meaning of leasing?
Using leasing operations to obtain the possibility of actual ownership of certain property, you can get significant benefit as opposed to direct acquisition with equity or borrowed funds.
This is achieved due to the fact that the lessee can use the property he is interested in almost immediately after making the down payment, which, as a rule, is no more than 30 % of market value.
The remaining amount is paid within the terms stipulated by specific agreements, the variability and flexibility of which distinguishes them favorably from loan agreements.
For example , payments may be seasonal, based on the specifics of the property and the type of business activity.
One more plus use of property on the basis of a leasing agreement, is that despite the possibility of operating the leased asset, taxes on such property are not credited (the obligation to pay property tax appears only after acquiring property rights).
So, operating property on the basis of a leasing agreement can have the following advantages:
- the ability not to immediately spend significant amounts of money;
- variety of conditions for leasing property;
- exploited property is not subject to tax.
Forms, types and types of leasing operations
2. Types of leasing - overview of 4 main types 📑
Leasing is often perceived only as financial instrument for carrying out business activities , mainly associated with the use of any equipment.
This is due to the fact that in the Russian Federation, initially leased property could be used for business purposes only, and the legislation itself regulating leasing relationships had a number of serious contradictions and discrepancies.
The possibility of obtaining property on lease for consumer purposes has become possible since 2011, whereas in Western European countries, the acquisition of property through the execution of leasing agreements is common practice.
View No. 1. Car leasing
You can lease a vehicle as follows: physical , so legal entity . Unlike a regular lease, the lessee has the opportunity to further obtain ownership of the vehicle if the conditions specified in the agreement are met. We have already talked about this in more detail in one of the previous articles.
Car leasing is a fairly reliable type of leasing operations for companies specializing in this, since cars, commercial and cargo vehicles are classified as sufficiently liquid property, popular on the secondary market.
Mandatory registration of transport with the relevant government agencies makes it possible to find such property in the event of dishonest behavior of the recipient or illegal actions of third parties.
Purchasing a car on lease has certain benefits:
- Payment for transport does not occur immediately, but gradually, in accordance with the concluded leasing agreement. You can use the transport purchased in this way immediately after making the first payment;
- Unlike buying a car on credit, leasing transactions can be executed under a wide variety of conditions. This applies to methods and timing of payments, operating conditions and obtaining ownership of transport. The recipient may be offered the most convenient payment schedule , and upon expiration of the leasing agreement, the transport can be returned or acquired into ownership upon payment of the remaining amount (if the cost of the property was not fully covered by payments under the agreement);
- legal entities using transport under a leasing agreement receive certain tax preferences;
- leasing a vehicle is much simpler than concluding a loan agreement. There is no need to immediately re-register ownership, a simplified process of checking the lessee and his solvency;
- Transactions for leasing vehicles are completed much faster than when receiving a loan. Often, from the moment of submitting an application to signing the leasing agreement, there are from 1 to 3 days.
Thus, if the goal of the lessee is the temporary operation of any vehicle, then, of course, leasing will be the best way to get the opportunity to use the desired car.
To purchase a car immediately, it may be attractive to receive ownership, but when leasing, during the operation of a particular vehicle, you can clearly determine whether a particular make or model of car is suitable for a particular purpose or user.
And if for some reason the car is not suitable, then it is enough to simply return it to the lessor, without thinking about how it will be on the secondary market.
Currently, since the requirements for the lessee to carry out business activities have been excluded from civil legislation, a fairly large number of organizations provide vehicles on lease.
Therefore, choosing the most suitable option for yourself, both in terms of the terms of the agreement and the subject of leasing, is not particularly difficult.
Motor transport can be used How in personal, so for commercial purposes . Therefore, it is on the example of this object of borrowing relations that one can draw up visual comparison table , demonstrating the differences in the design and operation of the vehicle purchased V leasing or in credit .
Leasing and loan comparison table
Comparison options | Credit | Leasing |
Down payment | Mandatory at least 10% from the cost of the car. | At the discretion of the leasing company, it may be from 0 to 50% from the cost of the car |
Documents provided | Identity documents, driver's license, documents confirming a sufficient level of income, work book. May be needed additional documents and certificates (consent of the spouse, certificates of absence of various debts, military ID, etc.). In some cases, a simplified procedure for granting a loan is used with fewer documents from the borrower, but at the same time the cost of the loan or the size of the down payment increases. | Passport, driver's license. |
Insurance | Compulsory insurance and compulsory motor liability insurance at the expense of the borrower in insurance companies offered by a credit institution, often at rates above average. | , CASCO by agreement with the lessor. In some cases, the lack of CASCO insurance can lead to increased leasing costs. |
Emergence of property rights | The vehicle immediately becomes the property of the borrower, but remains pledged to the credit institution for the entire term of the loan agreement. The disposal of transport is thus limited (it cannot be sold, re-registered, or mortgaged). | The transport remains the property of the lessor. After completion, the contract can be re-registered as the property of the recipient or returned to the leasing company. |
Registration time | From 3 to 10 working days. | Quite quickly, there are companies that decide to lease vehicles within 1 day. |
Operating restrictions | The need for regular maintenance at the expense of the borrower in accredited technical centers with an inflated cost of work and spare parts. | Departure of transport outside the Russian Federation only with the consent of the lessor. Various options for maintenance conditions; service may be included in the leasing price. |
Additional services | No | They can be included in leasing agreements, which are characterized by significant variability. Payment of transport taxes can be carried out by the lessor himself, as the owner of the transport. |
Withdrawal in case of non-compliance with the terms of the contract | Based on a court decision. Negative information is entered into the borrower's credit history. | At the discretion of the lessor. |
View No. 2. Leasing of equipment (machinery, etc.)
The qualitative performance indicators of an enterprise and its competitiveness largely depend on the functionality and technological capabilities of the equipment used. The ability to timely update existing production capacities using our own funds is far from being possible Not every organization engaged in production or provision of services.
As a result, many companies operate on outdated and partially faulty equipment, sacrificing the quality and volume of products or work performed. At the same time, quite significant funds are spent on repairs and maintenance of equipment, and its value decreases due to depreciation.
A way out of such situations could be obtaining the necessary equipment on leasing terms with the right of subsequent repurchase of the property.
The feasibility of using leased equipment is determined by the following advantages of this financial instrument:
- timely updating of production facilities and auxiliary equipment;
- more comfortable distribution of financial burden by splitting payments;
- reducing the tax burden;
- relatively simple paperwork and no collateral required.
It is advisable to use the opportunity to completely buy out leased equipment if it has been worn out for a long time, otherwise, after the expiration of the contract, the acquisition of obsolete and worn-out property will be meaningless and will pose an additional tax and financial burden.
If the subject of the leasing transaction is highly specialized or rapidly wearing equipment, the company providing leasing services may require an advance payment or deposit. But even in this case, using such property under leasing may be more profitable, since after there is no longer a need for such equipment, there will be no need to make efforts to sell it.
View No. 3. Financial leasing
This type of leasing, of course, does not involve the direct transfer of financial assets to the recipient, because money does not belong to non-consumable things and cannot be the object of leasing relations.
Financial leasing- this is a tripartite transaction consisting in the acquisition by the lessor of a certain property from any seller with its subsequent transfer for temporary use to the recipient with the right of redemption, that is, leasing.
The characteristics of the property, and sometimes the place where the lessor should purchase the required asset, can be determined by the lessee himself, thus reducing his immediate financial burden.
The lessor, acting here as an investor, receives part of the money spent through a down payment or advance payment, and his profit is included in payments made gradually by the recipient. For example, novice entrepreneurs in the field work according to this scheme.
View No. 4. Personnel leasing
In Russian legislation, this term is considered incorrect, since people cannot be the subject of rental relations. Therefore, in documents drawn up, a more familiar term is used - provision of personnel .
The difference between such provision of an enterprise with the necessary specialists and outsourcing is, as a rule, a shorter period of use of the attracted personnel and limitation of professional support functions.
When outsourcing the involved personnel are usually transferred the functions of providing entire infrastructure systems of the enterprise for a period of time at least 1 year.
Personnel leasing can be carried out for shorter periods and relate to different amounts of work.
From January 2016 years in Russia there is a ban on agency work, except in the following cases:
- use of temporary workers in affiliated structures;
- existence of a shareholder agreement between the parties;
- provision of personnel by an accredited organization acting as an employment agency.
Thus, you can take advantage of leasing in the form of providing personnel by contacting a recruitment agency specializing in this.
Using personnel leasing can have the following advantages:
- there is no need for a lengthy search for the required specialists;
- reducing costs for personnel and accounting support of hired personnel;
- lack of obligations to provide certain social guarantees;
- the possibility of a longer assessment of an employee being considered for permanent employment with an organization acting as a customer;
- exclusion of downtime and losses in the event of employee illness (the agency bears responsibility in cases of this kind).
At the same time, this method of attracting personnel may have a number of disadvantages:
- for the provision of personnel, the agency takes a commission, which can increase the amount of funds spent on providing specific functions of the enterprise;
- the likelihood of lower qualifications of employees with the same salary;
- inability to check the reliability and qualifications of personnel before being allowed to perform work;
- the likelihood of disloyal attitude of attracted employees to the management of the organization and the policies pursued.
To reduce the possibility of negative consequences for the enterprise, the professionalism of the company itself is important. employment agencies and, as a result, its reputation in the market for providing personnel services. It is the agency that selects workers according to the requirements of the customer organization, and it is the agency that is responsible for providing most of the social guarantees to the staff.
Other types of leasing
Types of leasing can be qualified not only by the object of the leasing operation, but also according to the degree of risk, terms of the leasing agreement.
According to the degree of risk, leasing is classified as follows:
- unsecured lease – additional guarantees for the fulfillment of the contract by the lessee are not provided. Such a guarantee may be, for example, the obligation to pay a penalty in case of early termination of the contract;
- partially secured lease – the transaction and property are insured;
- guaranteed leasing – risks are distributed among several participants in the leasing agreement, acting as guarantors of the lessee.
If we consider leasing agreements from the point of view of their validity period in relation to depreciation of the leased property, then we should highlight operational leasing , also called service.
Operating leasing occurs when the payment provided for in the agreement does not fully cover the cost of the leased asset, and the validity period of such an agreement is significantly less than the period of full depreciation of the leased asset.
This type of leasing is used for rapidly aging machinery and equipment or technically complex property that requires constant professional maintenance.
Such agreements, as a rule, provide for the implementation of certain activities for the installation and maintenance of the leased asset. Therefore, such provision of property on lease is sometimes called service .
Payment for services associated with the operation of the facility may be included in the corresponding payments for the use of the property or made separately.
Operating leasing is beneficial when carried out relatively short-term projects when there is no need to ultimately obtain ownership of the property used.
In this regard, to reduce risks for the lessor, Operating leases are often provided under conditions that increase the costs and liability of the recipient:
- higher fees for the use of property;
- the need to make an advance payment;
- the contract provides for penalties in case of early termination of operation of the leased asset;
- other additional conditions, guarantees on the part of the recipient.
To optimize the tax aspects of an enterprise’s activities, the so-called leaseback when the lessee sells specific property belonging to him to the lessor on the condition of subsequent provision of this property for rent to the recipient. The assets used are thus not counted as enterprise funds, which reduces the tax burden.
When choosing the most suitable leasing agreement, you should take into account not only the leasing object, but also choose a type of operation that will meet other interests of the recipient in terms of various associated payments, repairs and maintenance of the leased property, guarantees of rights, etc.
Leasing transaction process - 5 main steps
3. How leasing works - the procedure for registering leasing transactions 📝
Despite the comparative simplicity of leasing operations, as with the use of any financial instruments, certain rules must be followed.
The leasing agreement is concluded in several main stages, each of which must be properly assessed like with legal, so with financial point of view.
Step #1. Selecting a leasing company and leasing object
Compared to more developed countries, the leasing services market in Russia is somewhat limited in volume and in the range of services provided, but there are currently no major problems in finding a leasing company.
The leased object is determined based on the needs and financial capabilities of the potential lessee.
When choosing a leasing company, it would be a good idea to familiarize yourself with reviews about its work, study the standard documents prepared by such an organization.
A conclusion about whether the company in question is suitable for concluding an agreement with it can be made by analyzing the following information:
- history of the company in the financial and investment markets;
- number of completed agreements and existing contracts;
- the presence of company branches, staff, their level of qualifications;
- openness of the company, accessibility of the services provided and information about them;
- restrictions and conditions under leasing agreements in comparison with other companies.
Step #2. Familiarization with the terms of the leasing transaction and preliminary approval
After establishing contact with the company you like that provides leasing services, you should conduct preliminary negotiations on the terms of providing specific property for leasing.
Important positions in the agreements under consideration are:
- the amount of the down payment;
- guarantees of respect for the interests of the parties;
- size and frequency of payments;
- duration of the contract;
- conditions for termination of the contract.
After preliminary approval of the terms of the potential agreement, the lessee draws up application and prepares the required documents. The lessor, in turn, analyzes the recipient, assessing first of all his financial condition.
Step #3. Drawing up a leasing agreement
To conclude a contract, various documents may be required, the main ones are:
- direct application for leasing;
- accounting statements of the recipient (if such is a legal entity, For example, OOO— we wrote how to open it) for a certain period of time;
- identification documents, registration and statutory documents of the company;
- agreement with the supplier of the subject of the leasing agreement;
- documents on insurance of the leased object.
Depending on the subject of the agreement and the characteristics of the parties, the lessor may require other documents and certificates characterizing the recipient or the property being leased.
The leasing agreement itself necessarily includes:
- description of the subject of the contract;
- installation data of the parties;
- essential terms of the agreement;
- duration of the agreement;
- rental payment schedule;
- conditions for subsequent purchase or return of leased property;
- rights and obligations of the parties to the agreement;
- liability of the parties, including for failure to comply with the terms of the agreement.
Step #4. Making a down payment and delivery and acceptance of leased property
After the conclusion of the contract the recipient pays the down payment and accepts the leased item for temporary possession.
Pay attention! The right of ownership to such property is retained for the lessor for the duration of the agreement, and the recipient has the right to use the property for the purposes specified in the contract upon timely payment in accordance with the payment schedule.
If a property supplier is involved in the contract, then the obligation to deliver the leased item to the recipient, as a rule, rests with him.
Step #5. Use of the leased asset and registration of its ownership
In case of violation of the terms of the agreement (misuse of the subject of the contract, delays in payment), the lessor has the right to demand the return of property owned by him.
The recipient is responsible for damage and breakdown of property (unless otherwise provided by the agreement, For example, service leasing agreement ).
If the terms of the agreement are fulfilled in full, then after repayment of the corresponding amount specified in the agreement, the ownership of the property leased passes to the receiving party.
Profit from the use of leased property is the property of the lessee.
Leasing or credit - what is the difference, which is better and more profitable?
4. What is the difference between leasing and a loan and what is more profitable 📊
As noted above, the main and main difference between leasing and credit is moment of transfer of ownership of the object of agreement.
At buying on credit ownership of the property is registered immediately in the name of the recipient, and in the case leasing, the property may become the property of the lessee after the expiration of the relevant agreement.
When deciding whether to lease property, the recipient’s credit history is not as important as when receiving a loan and in some cases may not be analyzed at all. However, the financial condition of the recipient will be the subject of study, both when receiving a loan and when leasing the property.
Leasing or credit - which is more profitable in a crisis?
As for the feasibility of using during periods of economic instability, most analysts give preference leasing agreements , which is determined a number of factors that are of increased importance during a crisis:
- lower down payment (difference from the loan installment by 5-10%);
- frequent provision of discounts when concluding leasing agreements (according to statistics, discounts are provided when executing 70-90% of leasing transactions);
- the possibility of obtaining advantages when calculating taxes;
- a shorter period of time for consideration and execution of the transaction, a simpler procedure than when obtaining a loan.
5. Frequently asked questions about leasing (FAQ)
When faced with unfamiliar credit products, many questions often arise, some of which you want to answer separately.
Question 1. What can be the subject of leasing?
According to current legislation, the subject of leasing can be almost any non-consumable things, including:
- property complexes and enterprises;
- structures, premises and buildings;
- vehicles for various purposes;
- equipment (production, service, trade, etc.);
- other immovable and movable property that is non-consumable.
In this case, the subject of leasing operations cannot be:
- land plots;
- natural objects;
- property, the free circulation of which is limited or prohibited, with the exception of military property and certain foreign-made equipment for highly specialized purposes. Leasing of such property is carried out on the basis of international treaties in the manner determined by the President of the Russian Federation.
Question 2. Who can become a lessee?
They can participate as a recipient in leasing operations both residents and non-residents of the Russian Federation, both legal entities and individuals(including individual entrepreneurs). We have already covered this in a separate article.
In addition, the lessee may also act budgetary institution.
Question 3. What is subleasing? Is this legal?
Quite often there are cases when the lessee no longer needs the received property (equipment, transport, etc.) or there is no opportunity to use it at the moment. Then the questions arise: is it possible to rent out the leased asset? This situation is subleasing.
Such a transaction is legal provided that all relevant conditions are met. For the legality of the transaction, subleasing agreement (financial sublease agreement), where the parties to the agreement will be the subtenant (new purchaser of the property) and the previous lessee.
In this case, the lessor organization (owner of the property) gives a written prohibition or consent to the transaction.
Question 4. How to choose the right leasing company?
When choosing a leasing company, you should understand that in conditions of economic recession and instability, property owners are faced with the difficulty of making a profit both from the independent use of assets and from their sale. Therefore, certain things, especially those of high cost, are increasingly rarely purchased without borrowed funds.
As a result, at present there is no shortage of organizations providing leasing services and when choosing such an organization, attention should be paid to companies offering the most favorable conditions for the client.
At the same time, it should be at least a little analyze the activities of the leasing company, studying its history in the market, assessing the volume of already closed transactions.
The seriousness and stability of a company can be assessed based on the degree of openness of information about its activities and the availability of the services provided.
6. Conclusion + video on the topic of publication 🎥
In today's world with a wide variety of financial instruments, leasing is a fairly convenient and relatively simple way of obtaining the opportunity to use the necessary property.
Therefore, at least a superficial knowledge of the existence of leasing operations and the opportunities they provide will be useful not only to every entrepreneur, but also to ordinary people.
And a video on the topic “Development of leasing in Russia,” where the expert talks about the intricacies and features of leasing development.
It is no longer possible to imagine modern business activity without leasing. However, for many people this concept remains completely unclear, so they turn to search engines with the question: what is leasing in simple words?
Leasing- one of the types of financial services that involves the transfer of property for a long-term lease with a further right to purchase or return it. Unlike a regular lease, a leasing transaction involves not two, but three parties. Each of them has its own legal rights and responsibilities. The main legal norm ensuring the regulation of this area of relations is Federal Law No. 164-FZ “On Financial Lease (Leasing)”, which has been in force since 1998.
Participants in leasing legal relations
Based on Art. 4 No. 164-FZ leasing subjects are:
- Lessor- an individual or legal entity that acquires certain property and provides it to the lessee on the basis of the requirements specified in the leasing agreement.
- Lessee- an individual or legal entity who accepts the object of the contract for temporary possession and use at an agreed cost. Most often, this role is played by various companies engaged in commercial activities.
- Salesman- an individual or legal entity who is obliged to transfer property to one of the parties to the transaction based on the requirements of the purchase and sale agreement. The law allows this entity to play the role of a lessee within one legal relationship. As a rule, these entities are industrial enterprises, various dealers, and real estate companies.
Leasing subjects
Leasing companies
Many ordinary people ask the question: what are leasing companies? In simple words, these companies are key players on whose actions the state of the market depends. These include various enterprises, firms and organizations that conduct leasing operations. Highly specialized companies, as a rule, work with one leased item or a group of similar objects (for example, construction equipment). They have specialists on their staff who are responsible for maintaining the facility in good technical condition. Universal players deal with various items, often transferring their technical support to lessees. Along with leasing operations, such companies provide a wide range of other services:
- representative;
- advertising;
- marketing;
- consulting;
- intermediaries and a number of others.
Reasons for the demand for leasing
Unstable economic development and the protracted financial market crisis are closing access to credit for many entrepreneurs. Against this background, there is an outflow of capital and a decrease in the investment attractiveness of individual enterprises and entire industries.
Under these conditions, leasing becomes almost the only possible technology for business development. Financial lease allows you to update your production base and expand fixed assets, and also ensures the introduction of innovative solutions into production.
In simple words, leasing is an effective financial instrument that contains the features of long-term rental and lending.
What can you lease?
As a rule, the objects of leasing are motor vehicles, industrial equipment, aircraft, special equipment, material assets and even entire enterprises. Current legislation provides ample opportunities for choosing the object of a financial lease, classifying all non-consumable things in this category. However, it also imposes certain restrictions. So, It will not be possible to draw up a leasing agreement in relation to:
- military property;
- products devoid of individual data (for example, VIN for cars or serial number for industrial equipment), since the law regulates the need for accurate identification of property;
- property taken out of circulation or having appropriate restrictions;
- land and other natural objects.
In addition, leasing companies may also impose their own restrictions. Their list is individual and depends on the characteristics of the equipment itself and company policy. Nevertheless There are a number of general parameters that lessors adhere to:
- low liquidity of leased items;
- country of production and brand (for example, leasing companies fundamentally do not work with used Chinese cars);
- age of the leased item (for example, for cars, most often in the range of 3-7 years);
- the lower limit of the transaction cost is set individually and in different companies can differ by tens of millions of rubles;
- location of the client company and its financial well-being.
The refusal to provide leasing services in one company is largely a consequence of its internal requirements, so it makes sense to turn to its competitors in the future.
Benefits of the service for the consumer
- allows you to purchase expensive assets without withdrawing large amounts of funds from circulation, since it does not require urgent payment of the entire amount of payments;
- reduces the risks of asset ownership;
- significantly reduces property tax due to rapid depreciation of the leased asset;
- reduces the tax base, since payments for leased property are considered production costs for the lessee;
- unlike a classic loan, it is more accessible to many entrepreneurs, since the leased asset, being liquid, also becomes a collateral instrument;
- a wide range of forms and types of support;
- guarantees high-quality technical and service support;
- forms a more flexible and convenient financial strategy for the parties, allowing them to develop an optimal payment scheme (for example, taking into account the seasonality of the business or after receiving a certain profit on leasing equipment);
- a high degree of guarantee against criminals and unreliable suppliers, since all sellers undergo preliminary verification;
- possibility of free choice of supplier and delivery time of equipment.
Disadvantages of the service for the consumer
In addition to the undoubted advantages, financial leases have a number of typical disadvantages:
- legal complexity of the transaction;
- the final cost of purchasing a leased asset is more expensive than a regular purchase on credit;
- creates additional financial risks;
- making a mandatory advance payment, which can be 1/3 of the transaction cost;
- the need to provide additional guarantees and collateral.
Mechanism for carrying out a leasing operation
For a clearer understanding of how leasing works and what it is in simple words, you can take a closer look at the standard scheme of this operation. The consumer intending to formalize a leasing agreement selects a specific type and brand of the necessary equipment and enters into negotiations with the manufacturer on the terms of delivery, while simultaneously notifying him of his desire to purchase the object with the help of a leasing company. After discussing all the details, the buyer contacts the company and provides it with all the necessary information (data about the equipment, information about the company and its solvency, and a number of others).
Leasing transaction scheme
If approved, a leasing agreement is drawn up between the parties, of which the equipment manufacturer is notified. The leasing company and the manufacturer then enter into a sales transaction. After manufacturing the necessary equipment, the buyer accepts it and receives it for use.
Until recently, buying a car on lease was an inaccessible service for ordinary users. Several years ago, it was issued only by commercial entities for the purpose of promoting business. Today the situation has changed dramatically, and leasing cars are also available for ordinary car enthusiasts.
There are two types of car leasing:
- Operational (car rental without purchase option).
- Financial (car rental with option to buy).
According to expert data, leasing using the first method is no more than 10%, and in this case we are talking about a new vehicle fleet. Thus, leasing with the right to buy accounts for more than 90% of the total number of all car leasing transactions. For Western Europe the numbers are slightly different. Here, the percentage of operating leasing exceeds 30 points, and in some countries even operating leasing is 70% or higher. But what does car leasing mean?
What is a car lease
Each person has several opportunities to use their own vehicle:
- car rental;
- buying a car on credit;
- buying a car with personal funds.
A leased car is a middle ground between the first two options. This method of using transport is beneficial for those who do not want or do not have the opportunity to purchase a car with personal money.
Thus, the concept of “car leasing” means a long-term lease of a vehicle with the possibility of its further purchase, and in some cases without it at all.
Stages of buying a car on lease
- A car enthusiast who has decided to lease a car and has already chosen it must contact a leasing organization. There, to conclude this service, you will need to provide the necessary documents. Many car dealerships maintain contact with leasing companies, and therefore car leasing can be concluded right on the spot.
- Next, the lessor reviews all the documents and makes his decision on the possibility of obtaining the service. If the transaction is approved, then a car leasing agreement is concluded between the parties, which stipulates all the conditions for the provision of the service, the amount of payments and the procedure for their payment, and the period for the transfer of the car into the ownership of the user. A purchase and sale agreement is immediately concluded between the leasing organization and the seller of the vehicle.
- Then the lessor must buy the car and register it in his name. For this, personal funds are used, and in some cases, the buyer’s money, which is paid as a down payment. Next, the car is leased to the lessee under the contract.
- After which the buyer can use the transport, but he is not the owner and, accordingly, cannot dispose of it. The buyer is obliged to make payments in accordance with the concluded agreement, and the leasing organization has the right to systematically check the technical condition of the car. Such inspections are usually carried out at least once a year.
- If at the end of the contract the entire amount of payments is paid, then the car becomes the property of the buyer. Now he is the owner of the vehicle and has complete control over it.
Advantages of purchasing a car on lease
For an individual who wants to buy a car on lease, there are a number of advantages:
Leasing a car is much easier than buying it on credit. The point is the requirements presented to the buyer by the lessors. They are lower than those offered by banks.
The use of a personal vehicle that can be purchased on lease is often of interest to such categories of citizens who would not like to announce the presence of their own property. These include, for example, government officials or married people who are worried about the division of property in the event of a divorce.
A loan for commercial (freight or passenger) transport is practically unavailable to an individual. Whereas with the help of car leasing you can even buy special equipment.
A car leasing agreement is much easier to terminate than a car loan. Thanks to this, you can simply change cars at will, without the hassle of selling them.
Car dealerships often provide good discounts to their regular customers – leasing companies.
The leasing company can specify in the contract and, accordingly, initially undertake additional services. These include: car servicing, provision of another car when your own car breaks down. In this case, all expenses will be evenly divided among all payments under the leasing agreement.
Disadvantages of purchasing a car on lease
Of course, all services have their drawbacks in one way or another. Leasing is no exception.
For several years, the vehicle does not belong to the buyer until the amount of payments is repaid. That is, if the buyer violates the terms of the contract, the lessor has the right to return the vehicle.
Often, car leasing is more expensive than a loan. Given equal price conditions, leasing is an unprofitable service regarding the financial side of the issue. This does not apply to situations where car dealerships provide discounts to lessors.
The car leasing agreement may stipulate a certain technical maintenance service, which sometimes may not be entirely convenient for the buyer. This concerns the financial and territorial part of the issue.
Although leasing, unlike a loan, does not imply the transfer of ownership of the car initially, it does require the investment of personal funds (as a down payment).
Registration of ownership of a vehicle in a leasing scheme is carried out twice: first from the seller to the lessor, and then directly to the buyer. This means an additional expense that is covered by the buyer.
The process of purchasing a car on lease by an individual
To lease the car you like, you must, first, choose a leasing company with a good reputation. You should not use the services of the first leasing organization you come across or, even worse, the one imposed by a company at a car dealership.
Compare the conditions offered by different lessors. After all, purchasing a car on lease means long-term financial cooperation for several years. And even if the difference in the amount of the monthly payment is practically invisible, the final amount of overpayments may differ significantly.
Having chosen a company that meets your requirements, consult them on all issues that concern you. When the final decision is made in their favor, you should collect the documents necessary for car leasing and make an application.
The list of required documents for obtaining a car leasing is usually similar to the package of documents for concluding a car loan:
- passport;
- work book (or copy);
- income certificate;
- other documents that confirm your solvency. This could be property certificates, account statements, etc.
Of course, the list of documents in a specific situation may differ and depend on the leasing organization. The list of required documents should be checked directly with your lessor.
The period for issuing a response to an application can be up to 5 days. If the answer is positive, the deal is finalized.
This is how you briefly learned how an individual purchases a car on lease, the main advantages and disadvantages of such a service. Now you can decide for yourself whether this method of purchasing a vehicle is right for you.
In cases where it is not possible to purchase a car immediately in cash, individuals have to look for other ways to get what they want. Recently, the scheme of buying a car on lease has been gaining popularity.
For a long time, the opportunity to use a leasing agreement existed only for legal entities. Today, this method of purchasing a car is becoming feasible for individuals.
Previously, citizens could quickly obtain a car only by purchasing or renting it. Now everyone has the opportunity to purchase a car on credit or on lease. The only difference is that with a loan agreement a person uses his own car, and with a leasing agreement - a vehicle leased from the lessor.
What is car leasing for individuals?
Let's look at this issue in more detail. To understand what car leasing is for individuals, you should refer to the legislation. Federal Law No. 194 “On Financial Lease (Leasing)” offers the following definition: this is a scheme in which the lessor undertakes to buy into his own possession the property specified by the lessee (in our case, a car) from the seller he has chosen, and also to provide this same property for possession and use for a previously agreed payment with the right of subsequent redemption. The contract has the possibility of indicating that the choice of the seller and the purchased property can be made by the lessor.
Thus, the leasing agreement is tripartite. But the main characters between whom long-term relationships arise are the lessor and the lessee. Previously, such an agreement was popular among legal entities and individual entrepreneurs, who used it to make a profit when renting a vehicle. Now it has become convenient for individuals to use it.
Advantages of leasing for individuals
Purchasing a car on lease for individuals is associated with a number of advantages compared to other forms of acquisition with deferred payment. Among the main positive aspects are the following:
- requirements for the borrower are more loyal than for car loans; credit history is often not checked;
- A minimum package of documents is required for registration;
- the lessor is responsible for passing the vehicle's technical inspection, insuring it, and registering it (including bearing the corresponding expenses);
- not interested in the lessee's credit history;
- more favorable lending conditions, including the opportunity to get a deferred payment or extend the contract if necessary;
- the ability to abandon the car at any time.
Disadvantages of buying a car on lease
In addition to the advantages of buying a car on lease, there are also disadvantages to such a scheme. Moreover, individuals are usually much more interested in the disadvantages of leasing a car. After all, everyone wants to know what pitfalls may await when completing a transaction like this. The disadvantages of leasing include the following:
- An individual is not the owner of a car, but only uses it by proxy. In this case, the car belongs to the lessor.
- An individual who has leased a car does not have the opportunity to change anything in the vehicle in any way or operate it 100%. The lessor company, according to the agreement, prohibits the use of any actions to the collateral, such as painting, traveling abroad, etc. In addition, from time to time the lessee will need to appear to inspect the car at the owner’s office, as well as agree on each action planned in relation to the car.
- In the event of an accident or if there are problems with driving, the lessor company has the right to apply penalties.
It turns out that in some cases, taking out a car loan may be preferable to leasing a car for individuals.
Requirements for the lessee
There are a number of requirements for the lessee that are presented in almost all companies that provide car leasing to individuals:
- To draw up a contract, you must have a driver's license;
- requirement for Russian citizenship and registration;
- there must be a permanent place of work and work experience, respectively, and a constant income;
- The preferred age of an individual is 20-60 years.
The simplest requirement when concluding a leasing agreement will be the provision of a passport of a citizen of the Russian Federation and a driver’s license. A certificate of permanent income is quite reasonable, since the lessor needs confidence that he will receive the amount due to him. But the latter is insured against non-payment by the fact that the property belongs to him completely, until the final payment. Therefore, if payments stop being received, the car will be returned to the lessor, and the funds paid before will be taken into account under the agreement as payment for the lease.
Terms of the agreement
Depending on the company with which cooperation is carried out, the conditions under which a car leasing agreement is drawn up with an individual may change. However, there are a number of points that are always taken into account.
Payment procedure
One of the important sections that everyone is interested in in a leasing agreement is the payment procedure and timing of payments. All schedules and conditions are determined by the leasing company itself, and it is the leasing company that decides what the leasing conditions for individuals will be for a car.
Most often, the time to buy a car is from two to five years. Naturally, the longer the term, the lower the monthly payment. A schedule is agreed upon between the parties, according to which the lessee undertakes to pay the amount due.
The contract also specifies the possibility of early redemption of the car. This procedure will help save some money. You should be careful when signing documents: the lessor often indicates penalties for early repayment.
Prepayment
The contract sets the amount of the advance payment, which can vary from 0% to 50%. Making such a payment is beneficial because the more the lessee pays in advance, the less he will subsequently have to pay each month. A minimum prepayment is beneficial for those who have little money to buy a car.
In addition to those mentioned above, there are other significant ones:
- procedure for receiving a car;
- how the vehicle will be checked, a maintenance schedule will be specified;
- fines for failure to comply with the terms of the contract;
- procedure for car insurance.
Before leasing a car, individuals should carefully study the terms of the contract. If you disagree with some aspects of the document, you should immediately discuss them.
Choice of lessor
Some precautions should be taken when choosing a company to lease a car. It is important to take a responsible approach to checking the company with which the contract will be concluded.
The lessor must have a certain reliability and work in the market for some time. If such a company is part of a large holding, this is a definite advantage.
A reliable organization has a certain list of supplier companies with which it works. It must also provide leasing services for individuals and have freely available prices for its services.
To understand whether the deal is profitable, it is important not only to know what car leasing is for individuals, but also to choose the right lessor. For this purpose, you should collect the maximum amount of information about companies providing such a service.
Car leasing in Minsk for individuals is provided by a huge number of organizations. How not to make a mistake with your choice and not stumble upon scammers? What to look for?
There are several rules that will help you choose a reliable lessor:
- A company's experience can be assessed by how long it has been in the market. It is this period that allows us to judge that the lessor is quite reliable and is not a fly-by-night company.
- The presence of a complete website for an organization is a sign of seriousness of intentions. In this case, it is worth carefully studying the resource. It is desirable that there be not only information about the organization, but also useful articles on the topic and a preliminary calculation calculator.
- It is important to check the contact information for contacting the lessor. It would be desirable to have 24/7 consultation available. In the future, if an unusual situation arises, this may be very useful.
- Before concluding the contract, the lessee must be provided with all the necessary information (for example, a payment schedule), and all unclear points must be explained. The client must be told where and under what conditions the car will be serviced.
- Having chosen the preferred leasing company, the buyer should study reviews about it on the Internet. But you shouldn’t blindly believe each of them. Very often, reviews are written at the request of the organization itself or its competitors. Typically, truthful opinions are written in simple language, without abstruse language, with a specific description of the situation.
Stages of registration
The procedure for registering a car lease for individuals usually includes the following steps:
- A car is selected.
- The lessee submits an application to the lessor company. In this case, applications can be submitted to several companies.
- Companies provide their response to the application with a cost estimate and payment schedule. That is, they make their proposal for a specific case. At this stage, the lessee has the opportunity to choose the prices and terms provided.
- Upon receiving a positive decision, an individual visits the company’s office to complete the transaction.
- In the office, all disagreements are resolved, a final version of the payment schedule and payment amounts are prepared.
- Prepayment is required. The funds are transferred to the seller's account.
- The car is registered as the property of the leasing company and transferred for use to an individual.
Is car leasing profitable for individuals?
Purchasing a car on lease is very profitable and convenient for citizens who, for various reasons, do not want to appear in various documents as the owner of the vehicle. There may be several reasons for this. For example, in order not to divide it during a divorce or in order to hide property from bailiffs.
Many leasing companies have partners in expensive car dealerships. Such salons provide their clients with pleasant discounts and bonuses.
If a citizen is going to lease a car that has already been used, then there are some special points. Of course, this type of car is much cheaper and its operating age does not exceed 5-7 years. All maintenance, as in the case of a new car, is carried out at the expense of the lessor. And this has a big advantage, since the lessee does not have to worry about how to replace this or that part.
Due to the high cost of a truck, leasing a truck for individuals is also extremely profitable.
Leasing is also convenient for those who are used to regularly changing cars. At the end of the available payments under the leasing agreement, the car can either remain in full possession of the lessor or become the property of the lessee. A leasing agreement, unlike a loan agreement, can be terminated much faster and easier. The citizen gains the opportunity to change cars more often without spending time on resale.
Having carefully studied what car leasing is for individuals and what its features are, everyone must draw conclusions for themselves. The most convenient way to purchase a car depends on the specific situation and personal preferences of the consumer. Moreover, everyone can identify the advantages and disadvantages of such a scheme, which will manifest themselves in their situation. It turns out that it is up to the consumer himself to decide whether to take out leasing or not. Let us note one thing: the existence of such methods of purchasing a car has helped many people out, more than once.