Leasing - what is it in simple words: a detailed description of the term, types of leasing and their features + the difference between leasing and credit

Hello dear readers of the financial magazine Rich Pro! In this issue, we tell 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 also what is more profitable - leasing or credit.

For anyone, it is no longer something unexpected and original to purchase something using borrowed money. Consumer loans, loans of 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 to leasing agreements, which in Russia are most often concluded in the implementation business activities. This is due to the fact that the acquisition of property on lease by organizations and non-commercial entities has become relatively recent. But in some cases, it is the acquisition of something under leasing that can be more profitable and convenient.

Leasing - A modern tool in the financial sector, therefore, information on the types of leasing, its differences from other loan products will be useful to motorists, entrepreneurs, as well as those who are just about to open their own business using borrowed funds and equipment. We have already written in separate articles how to start a business from scratch and where you can get a loan to a small business without collateral.

But how this will be more convenient and profitable to use leasing services will be discussed in this publication.

Leasing: definition and concept of the term, types and forms of leasing, the main differences from the loan, advantages and disadvantages

1. What is leasing in simple words - the definition and essence of leasing

Literally term leasing translates as "rent, rent", but the main difference between a leasing operation and the usual provision of property for rent is the possibility of subsequent redemption of used property, taking into account the payments made.

Leasing is a form of lendingin which certain property is provided for temporary use and possession for a fee.

1.1. Subjects and objects of leasing relations

The subjects of a leasing operation are:

• lessee - an individual or legal entity that receives the opportunity to use any property on the terms of a leasing agreement;
• lessor - a credit institution, legal entity, as well as individuals providing leasing services;
• insurerinsuring the transaction and (or) the property being transferred;
• property provider - seller or manufacturer of certain equipment, dealer, owner of property.

Lessee and lessor are obligatory participants in the leasing agreement and represent the main parties to the contract.

Insurance of the transaction and the property itself, leased, is carried out at the discretion of the lessor, insurance conditions, its cost and volume are determined by agreement of the parties.

The lessor may be the owner of the property being transferred, and can only provide the service of transferring the property for temporary use from the supplier to the lessee.

The object of leasing relations practically any non-consumable property can act (with the exception of land plots and other natural objects, as well as objects whose free circulation is limited or prohibited).

It can be:

• constructions and buildings;
• equipment, production lines;
• enterprises;
• transport for various purposes;
• other property in which use 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 benefits in contrast to direct acquisition of own 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 is usually no more than 30% of market value.

The remaining amount is paid within the time stipulated by specific agreements, the variability and flexibility of which compares them favorably with loan agreements.

for example, payments may be seasonal, based on the specifics of the property and the type of business.

One more plus use of property on the basis of a leasing agreement, is that despite the possibility of exploitation of the leased asset, taxes on such property not accrued (the obligation to pay property tax appears only after the acquisition of property rights).

So, the operation of property on the basis of a leasing agreement may have the following advantages:

• the ability to immediately not spend significant cash;
• a variety of conditions for leasing property;
• operated property is not taxed.

Forms, types and types of leasing operations

2. Types of leasing - an overview of 4 main types

Leasing is often perceived only as financial instrument for entrepreneurial activitymainly related to the use of any equipment.

This is due to the fact that in the Russian Federation initially leased property could be used only for entrepreneurial purposes, and the legislation governing leasing relations itself had a number of serious contradictions and differences.

The possibility of leasing property for consumer purposes has become possible since 2011while in Western Europe, the acquisition of property through the implementation of leasing agreements is common practice.

View number 1. Car leasing

To lease vehicles can as physicaland entity. Unlike ordinary leases, the lessee has the opportunity to further obtain transport ownership if the conditions specified in the contract are met. We have already talked in more detail about car leasing for individuals and legal entities in one of the previous articles.

Car leasing is a fairly reliable type of leasing operations for companies specializing in this, as automobiles, commercial and freight vehicles are fairly liquid assets that are popular in the secondary market.

Obligatory registration of transport in the relevant government agencies allows you to find such property in case of unfair behavior of the recipient or illegal actions of third parties.

Leasing a car has certain benefits:

• Payment for transport does not occur immediately, but gradually, in accordance with the leasing agreement. You can use the transport acquired in this way immediately after making the first payment;
• unlike buying a car on credit, leasing operations can be executed with a wide variety of conditions. This applies to the methods and timing of making payments, operating conditions and obtaining ownership of the transport. The recipient may be offered the most convenient payment schedule, and upon termination of the lease agreement, transport can be returned or acquired into the property upon payment of the remaining amount (if the value of the property was not fully covered by payments under the agreement);
• legal entities using transport on the terms of a leasing agreement receive certain tax preferences;
• registration of vehicles on lease is much simpler than concluding a loan agreement. It is not required to immediately renew the ownership right, the simplified process of checking the lessee and his solvency;
• Transactions on the transfer of transport to leasing are completed much faster than when obtaining a loan. Often, from the time of the application to the signing of the leasing agreement, from 1 to 3 days.

Thus, if the goal of the lessee is the temporary operation of a vehicle, then, of course, leasing will be the best way to get the opportunity to use the right car.

Obtaining a car loan can also be attractive for acquiring a car immediately, but when leasing during the operation of a particular vehicle, you can clearly determine whether a particular make or model of the car is suitable for specific purposes or a specific user.

And if the car for some reason did not fit, then it is enough to simply return it to the lessor, without thinking about how to sell the car quickly and expensively in the secondary market.

At present, since the requirements on the implementation by the lessee of entrepreneurial activity are excluded from civil law, a sufficiently large number of organizations provide vehicles for leasing.

Therefore, choosing the most suitable option for yourself, both under the terms of the agreement and on the subject of leasing, is not particularly difficult.

Motor vehicles can be used as in personaland for commercial purposes. Therefore, it is precisely with the example of this object of borrowed relations that one can compose visual comparison tabledemonstrating differences in the design and operation of a car purchased at leasing or in credit.

Comparison table of leasing and loan

View number 2. Leasing of equipment (equipment, etc.)

Qualitative indicators of the enterprise, its competitiveness largely depend on the functionality and technological equipment of the equipment used. The ability to timely update existing production facilities with our own funds is far not each organization engaged in the production or provision of services.

As a result, many companies work outdated and partially defective equipmentsacrificing the quality and volume of products or work performed. At the same time, quite significant funds are spent on repair and maintenance of equipment, and its cost is reduced due to depreciation.

The way out of such situations may be obtaining the necessary equipment on leasing terms with the right of subsequent redemption of ownership.

The feasibility of using equipment received on lease is determined by the following advantages of this financial instrument:

• timely updating of production facilities and auxiliary equipment;
• more comfortable distribution of financial burden due to the separation of payments;
• reduction of tax burden;
• relatively simple paperwork and the optional availability of collateral.

It is advisable to use the possibility of a full redemption of leased equipment for a long period of wear, otherwise, after the expiration of the contract, the acquisition of obsolete and worn-out property will be meaningless and will entail an additional tax and financial burden.

If the subject of the leasing operation is highly specialized or wearing equipment, the company providing leasing services may require a prepayment or a deposit. But even in this case, the use of such property in the framework of leasing may be more profitable, since after the elimination of the need for such equipment, you will not need to make efforts to sell it.

View number 3. financial leasing

This type of leasing, of course, does not imply a direct transfer of funds to the recipient, because money does not belong to non-consumable things and cannot be the subject of a leasing relationship.

financial leasing - this is a tripartite transaction involving the lessor acquiring certain property from a seller with a subsequent transfer to a recipient for temporary use with the right to purchase, that is, leasing.

The characteristics of the property, and sometimes the place where the lessor must acquire the required asset, can be determined by the lessee himself, thereby reducing his momentary financial burden.

The lessor, acting here as an investor, receives a part of the money spent from the down payment or an advance payment, and its profit is laid down in payments gradually made by the recipient. For example, beginning entrepreneurs in the field of vending business work according to this scheme.

View number 4. Staff leasing

In Russian law, this term is considered incorrect, since people can not be the subject of a rental relationship. Therefore, in the executed documents, the more familiar term is used - provision of staff.

The difference between such provision of the enterprise with the necessary specialists from outsourcing is, as a rule, a shorter period of use of the involved personnel and limitation of the functions of professional support.

When outsourcing the personnel involved are usually transferred functions to ensure the whole infrastructure systems of the enterprise for a period not less than 1 year.

Staff leasing may be carried out for shorter periods and relate to a different scope of work.

From January 2016 years in Russia there is a ban on wage labor, with the exception of the following cases:

• the use of temporary workers in affiliates;
• the presence 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 recruiting agency specializing in this.

Using staff leasing can have the following advantages:

• there is no need for a long search for the required specialists;
• reduction of costs for personnel and accounting support of involved personnel;
• lack of obligations to provide certain social guarantees;
• the possibility of a longer assessment of the employee, considered for a permanent job placement in the organization acting as the customer;
• elimination of downtime and losses in case of illness of employees (the agency is responsible in cases of this kind).

At the same time, this method of attracting staff may have several disadvantages:

• the agency takes a commission for the provision of personnel, which may increase the amount of funds spent on providing specific functions of the enterprise;
• the likelihood of lower qualifications of employees with the same salary;
• the inability to verify the reliability and qualifications of personnel before admission to the work;
• the likelihood of a disloyal attitude of the employed employees to the organization’s management policy.

To reduce the possibility of negative consequences for the enterprise, the professionalism of the employment agencies and, as a result, his reputation in the market for the provision of personnel services. It is the agency that selects employees according to the requirements of the customer organization, and it is on it that it is the responsibility to provide most of the social guarantees to the staff.

Other types of leasing

Types of leasing can be qualified not only for the object of the leasing operation, but also by degree of risk, terms of the leasing agreement.

According to the degree of risk, leasing is classified as follows:

• unsecured leasing - 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 upon early termination of the contract;
• partially secured leasing - the transaction and property are insured;
• guaranteed leasing - risks are distributed among several parties to the leasing agreement, acting as guarantors of the lessee.

If we consider leasing agreements in terms of their validity in relation to depreciation of leased property, it should be highlighted operational leasingalso called service.

Operational leasing occurs when the payment stipulated by the agreement does not fully cover the cost of the leased asset, and the duration of such an agreement is significantly less than the period of complete depreciation of the object of the contract.

This type of leasing applies to rapidly aging machinery and equipment or technically complex property that requires ongoing professional service.

Such agreements, as a rule, provide for the implementation of certain measures for the installation and maintenance of the leased asset. Therefore, such a lease of property is sometimes called service.

Payment for services associated with the operation of the facility may be included in the relevant payments for the use of property or carried out separately.

Operational leasing is beneficial in the implementation of relatively short-term projectswhen there is no need for the final acquisition of ownership of the property used.

In this regard, in order to reduce risks for the lessor, operating leasing is often provided on 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 the leased asset;
• other additional conditions, guarantees from the recipient.

To optimize the tax aspects of the company’s activities, the so-called leasebackwhen the lessee sells his specific property to the lessor on the condition that the property is subsequently leased to the recipient. Assets used, therefore, are not accounted for as enterprise assets, which reduces the tax burden.

When choosing the most suitable leasing agreement, one should take into account not only the object of leasing, but also choose the type of operation that will meet the other interests of the recipient in terms of various related payments, repair and maintenance of the leased property, guarantees of observance of rights, etc.

Leasing transaction process - 5 main steps

3. How leasing works - the procedure for processing leasing transactions

Despite the comparative simplicity of leasing operations, as with any financial instruments, certain rules must be followed.

The conclusion of a leasing agreement occurs in several main stages, each of which must be correctly evaluated as with legalso with financial points of view.

Step number 1. Choosing a leasing company and a leased asset

Compared to more developed countries, the market for leasing services in Russia is somewhat limited in volume and in the range of services provided, however, there are currently no big problems in finding a leasing company.

The leased asset is determined based on the needs and financial capabilities of the potential lessee.

When choosing a leasing company, it will not be superfluous to familiarize yourself with reviews about her work, study the standard documents drawn up by such an organization.

The conclusion about whether the company in question is suitable for concluding an agreement with it can be made by analyzing the following information:

• company history in the financial and investment markets;
• the number of executed agreements and existing contracts;
• the presence of company branches, staff, level of qualifications;
• openness of the company, accessibility of the services provided and information about them;
• limitations and conditions of leasing agreements in comparison with other companies.

Step number 2. Familiarization with the terms of the leasing transaction and prior approval

After establishing contact with a company that provides leasing services, you should conduct preliminary negotiations on the conditions for the provision of specific property for leasing.

Important positions in the agreements under consideration are:

• down payment amount;
• guarantees of observance of interests of the parties;
• size and frequency of payments;
• contract time;
• terms of 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, carries out the analysis of the recipient, evaluating primarily its financial condition.

Step number 3. Drawing up a lease agreement

For the conclusion of the contract may require various documents, the main of which are:

• leasing application directly;
• Recipient's accounting reports (if such is a legal entity, eg, Ltd - how to write it we wrote here) for a certain period of time;
• identity documents, registration and charter documents of the company;
• an agreement with the supplier of the subject of the leasing agreement;
• documents on insurance of the leased object.

Depending on the subject of the contract and the characteristics of the parties, the lessor may need other documents and certificates characterizing the recipient or property transferred to leasing.

The lease agreement itself necessarily includes:

• description of the subject of the contract;
• installation data of the parties;
• material terms of the agreement;
• duration of the agreement;
• rental payment schedule;
• conditions for the subsequent repurchase or return of the leased property;
• rights and obligations of parties to the agreement;
• responsibility of the parties, including for non-compliance with the terms of the contract.

Step number 4. Down payment and delivery-acceptance of leased property

After the conclusion of the contract, the recipient pays the down payment and takes the leased asset into temporary possession.

Note! Ownership of 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 stipulated by the contract with timely payment in accordance with the payment schedule.

If the supplier of the property participates in the contract, then the obligation to deliver the leased asset to the recipient, as a rule, rests with him.

Step number 5. Use of the leased asset and its registration in 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 belonging to him on the basis of property rights.

Responsibility for damage and damage to property is borne by the recipient (unless otherwise provided by agreement, eg, service lease).

If the terms of the agreement are met in full, then after repayment of the corresponding amount specified in the contract, the ownership of the property transferred to the lease passes to the receiving party.

The profit from the use of leased property is the property of the lessee.

Leasing or loan - what is the difference, which is better and more profitable

4. What is the difference between leasing and credit and what is more profitable

As noted above, the main and main difference between leasing and credit is the moment of transfer of ownership of the object of the agreement.

At credit purchase the right of ownership of the property is issued immediately to the recipient, and in case of leasing, the property may become the property of the lessee after the expiration of the relevant contract.

When deciding whether to lease property, the credit history of the recipient does not have the same significance as when obtaining 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 obtaining a loan, and when registering property on lease.

Leasing or credit - which is more profitable in a crisis

As for the feasibility regarding the use during periods of economic instability, most analysts prefer leasing agreementsthat is determined by a number of factors of increased importance during the crisis:

• lower down payment (difference from the loan installment by 5-10%);
• frequent provision of discounts at the conclusion of leasing agreements (according to statistics, discounts are provided upon execution of 70-90% of leasing transactions);
• the possibility of obtaining benefits in calculating taxes;
• a shorter period of time for consideration and execution of the transaction, a simpler procedure than when obtaining a loan.

5. Leasing Frequently Asked Questions (FAQ)

When confronted with unfamiliar credit products, many questions often arise, some of which I would like to answer separately.

Question 1. What can be the subject of leasing?

According to the current legislation, the subject of leasing can be almost any non-consumable items, including:

• property complexes and enterprises;
• constructions, 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 may not be:

• land;
• natural objects;
• property, the free circulation of which is restricted or prohibited, with the exception of military equipment and certain equipment of foreign production of highly specialized purpose. 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?

Participate as a recipient in leasing operations may and residents and non-residents of the Russian Federation, both legal entities and individuals (including individual entrepreneurs). We have already told you how to arrange IP in a separate article.

In addition, the lessee may be state-financed organization.

Question 3. What is subleasing? Is this legal?

Quite often there are cases when the lessee does not need the received property (equipment, transport, etc.) or is currently unable to use it. Then questions arise, is it possible to lease 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 is concluded sub-leasing agreement (financial sublease agreement), where the parties to the contract will be the sublease (new acquirer of property) and the former lessee.

In this case, the lessor organization (owner of the property) gives a written ban or consent to the transaction.

Question 4. How to choose a leasing company?

When choosing a leasing company, it should be understood that in conditions of economic recession and instability, property owners are faced with the difficulty of making a profit both from independent use of assets and from their sale. Therefore, certain things, especially those of high cost, are less and less acquired without borrowing funds.

As a result of this, there is currently 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, at least a little analyze the activities of the leasing company, having studied its history in the market, evaluating the volume of already closed transactions.

The seriousness and stability of the company can be estimated based on the degree of transparency of information about its activities, the availability of services.

6. Conclusion + video on the topic of publication

In today's world with a wide variety of financial instruments, leasing It is a fairly convenient and relatively simple way to get the opportunity to use the necessary property.

Therefore, at least a superficial knowledge of the existence of leasing operations and the opportunities provided by them will be useful not only to every entrepreneur, but also to ordinary people.

In conclusion, we recommend that you watch the video clip about leasing - what is it in simple words and is it more profitable than a loan:

And a video on the topic “Development of leasing in Russia”, where the expert talks about the subtleties and features of the development of leasing.

Dear readers of the Rich Pro business magazine, if you still have questions and comments on the topic of the article or would like to share your experience in using leasing services, leave them in the comments below. Good luck in all your endeavors!

Watch the video: What Does Leasing Mean? - A Short History of Leasing (November 2024).