- this is a special form of lending, which is used when acquiring fixed assets of an enterprise or in the case of purchasing expensive goods by individuals. The same term may refer to a certain type of financial services or a long-term lease of property with a subsequent right of full redemption.
Description of leasing in simple words
Leasing is the rental of something (real estate, car, special equipment, etc.), but not directly, but through a leasing company. For example, an entrepreneur can contact such a company and ask her to purchase the equipment he needs. The leasing company purchases this equipment with its own money and leases it to the entrepreneur for a long period. In the future, the entrepreneur can, if necessary, redeem it.
When to use
If the provision of a bank loan is impossible, and attraction of long-term investments cannot be regarded as a way out of the current situation, leasing can be considered in this case as the most effective tool.
Through its use, it is possible to achieve a significant expansion of the production base of a particular company, the acquisition of equipment of the latest generation, the introduction of advanced technologies in manufacturing process which can ultimately lead to higher profits.
Essence of leasing
This financial instrument is very organically capable of combining the possibilities of a financial loan and a long-term lease. Its essence lies in the fact that a company acting as a lessor acquires certain property in private ownership. In the future, it will be rented out to everyone. Rent is charged for the use of such property.
Under the terms of the concluded agreement, at the end of the specified period, the lessee can agree to extend cooperation, declare their intention to complete contact with the lessor or buy out all rights to own the leased property.
Unlike a loan, collateral for leasing is not a mandatory component. A big plus of this solution can also be called a long period of cooperation, during which you can achieve a significant reduction in the amount of monthly payments. This, in turn, will allow you to optimally manage the assets of the enterprise and help predict possible costs.
Types of leasing
If we talk about the subject of leasing, then various enterprises, structures, equipment, vehicles, as well as movable and immovable property can act as such. The exception is land plots and other objects that are completely prohibited for free circulation. When transferring the subject of leasing for temporary use, the lessor will act as a full-fledged owner.
Regarding the types of leasing, here it should be noted financial, operational and returnable. Classification is carried out according to the period of use of the leasing object and the economic essence of the contract.
Return lease
Leasing back is a special case where the lessor also acts as the lessee at the same time. In a sense, here we can say that leaseback is a kind of form of providing credit funds secured by production assets.
Operational leasing
Operational leasing is a situation in which the drawn up term of the leasing agreement is significantly less than the period of use of the leased asset. At the same time, the rate for leasing will be slightly higher than for financial leasing. If we analyze the economic essence of this phenomenon, then we can draw a certain parallel with a simple lease.
financial leasing
Financial leasing is one of the ways to attract targeted financing. In this case, the term of the lease agreement will be equivalent to the term of use of the object. Most often, at the end of the specified period of cooperation, the value of the object is close to zero, which can serve as an initiative to transfer the leased asset to the final right of ownership to the lessee.
When creating a new production or enterprise, the main problem for the owner is finding financial resources. The same problem is relevant for existing industries, if it is necessary to purchase expensive machinery or equipment. There are many ways to solve this problem. This is the attraction of an external investor, credit, rent and, finally, leasing.
If we turn to direct translation, then English word lease translates as rent. The consequence of this is that many people (even entrepreneurs) consider these concepts to be synonymous. However, today in the conditions of Russia, the concept of leasing differs significantly from rent. These differences will be discussed below. There are several definitions of leasing. The following definition is quite common: leasing is a type of financial service associated with the transfer of property for use for a certain period with the possibility of redemption. Answer the question what is leasing in simple terms is the subject of this article.
As a rule (but not always), the subjects of leasing are three parties. Let's consider them in more detail:
- the producer or seller as a party that sells the property;
- the leasing company (lessor), the party to whose ownership the acquired property is transferred;
- recipient of property (lessee), a party that uses the subject of leasing during the period of validity of the leasing agreement.
The leasing company acts as an intermediary here. What is a leasing company? This is the company that owns the subject of the leasing agreement. It pays all taxes on the property and, in many cases, assumes all risks in its operation. It is clear that leasing companies must have significant financial resources. For this reason, reliable leasing companies are subsidiaries of large banks.
The main thing in the leasing scheme is the fact that for the entire period of the leasing agreement, equipment or other objects are not the property of the enterprise (lessee), but remain the property of the lessor. Consider what forms of leasing are.
Forms of leasing
Currently, there is a certain classification of leasing operations. According to the financial and economic content, it is customary to distinguish three main forms of leasing:
- financial leasing. The meaning of such an operation is that the lessee receives the equipment (vehicles) of the manufacturer through the leasing company in a targeted manner. After that, the company pays the cost of the leased asset in installments during the term of the contract with the leasing company. The depreciation period for equipment under a leasing agreement may be lower than usual. At the end of the contract, the cost of the equipment is close to zero and it can be purchased from the lessor. The manufacturer (seller) is aware of the existence of the leasing agreement and the company submits all claims to the quality to it.
- Operational (operational) leasing. Its difference from financial leasing is that the term of the contract is significantly less than the service life of the equipment. In this case, the leasing company assumes all responsibility and insurance risks for the object. This type of leasing is very similar to renting.
- Return lease. This is a special type of transaction in which, for example, an investor builds an enterprise for his or credit funds (buys equipment), sells it to a leasing company, and then uses the facility under a leasing agreement. The meaning of the transaction is to quickly receive significant funds that can be used for various needs. It should be noted that such transactions are often used for tax evasion and may have a corruption component. Such agreements are often concluded under different state jurisdictions of the parties, who use the features of the tax regime in different countries. For this reason, the attention of tax authorities and law enforcement agencies is riveted to them. Especially if the enterprise and the leasing company have common owners. Such transactions are necessarily analyzed by tax authorities for their profitability compared to a conventional loan.
Read also: What is margin in simple words
What is more profitable loan or leasing?
There is no single answer to this question. The whole point of the existence of various financial instruments lies in their features, which determine the expediency of their use in specific conditions.
The leasing agreement is concluded for a specific object, which excludes the misuse of funds.
In addition, such an object, by definition, is liquid, which reduces financial risks. Sometimes equipment manufacturers and leasing companies are partners, and such agreements serve as a form of support for manufacturers. In addition, this is sometimes government stimulation of demand for a particular product. These factors help reduce the cost of financial resources in such transactions. Such contracts with a leasing company can be concluded by both legal entities and individuals.
Leasing agreements contribute to a more complete VAT refund, since, unlike a loan, the entire amount of such an agreement is subject to VAT. Payments under the agreement are held in the accounting department under the expense item. Faster depreciation of equipment and vehicles in such transactions also affects earnings. Property tax is also paid by the lessor. In addition, practice shows that leasing companies are more tolerant than banks regarding short-term delays in payments that arise as a result of cash gaps. Sometimes you can agree on a payment schedule, taking into account the seasonality of product sales. This is especially beneficial for agricultural producers. Calculations to determine the profitability (or unprofitability) of leasing agreements, in comparison with loans, are quite complex and, best of all, they should be entrusted to experienced specialists.
The disadvantages of a leasing agreement include the need for a down payment (although there are such requirements when obtaining a loan). This is not a mandatory requirement, but sometimes such a contribution, under a contract for vehicles, reaches 50%. Equipment and vehicles purchased under leasing agreements generally cannot be leased and cannot be pledged.
The lack of financial resources from a company or an individual to purchase expensive objects is the main reason to apply to a bank and get a loan.
But high interest rates on loans, a complicated registration procedure and additional commissions stop many borrowers. Exist Alternative option– leasing of a car, real estate, equipment. Is it better than lending? Under what conditions is it issued? And what are the pitfalls of leasing to consider?
Leasing - definition, scheme, examples
The concept of leasing stands at the intersection of two definitions: a loan and a lease, in fact, it is something in between, generalizing the features of the two programs, but having significant differences. The object of the transaction can be buildings, expensive equipment, transport, companies. Leasing is available to individuals and entrepreneurs, however, to issue ownership rights to it land plot and natural resources, such as water bodies and forests, will fail.
Let's try to disassemble the scheme for dummies. At its core, leasing is a lease. Imagine a situation: you want to buy a car, but do not have the financial ability. What to do?
- You contact a leasing company that evaluates the terms of cooperation, determines how profitable it is to work with you;
- The other face of the deal is the owner of the car, who decides to sell it. He does not want to wait and submit ads, he turns to an office that deals with urgent redemption. The price of a car for him will be lower than the market price - this is a fee for urgency;
- The leasing company is convinced that the car is liquid, the cost suits it, and the period of use does not exceed 5 years. A buyout deal is in progress;
- Now the company has a car, and you can purchase it on lease by signing an agreement;
- You get a vehicle for use without a down payment, but you are not its owner - all rights belong to the company. At the same time, you can easily use the equipment at your discretion, but remember that you pay for the repairs yourself;
- You make monthly lease payments, for example, if the car costs 500,000 rubles every month for three years, you will have to pay about 20 thousand rubles;
- At the end of the contract, the car can be returned or redeemed at the residual value. For this example, it is 1000 rubles, but it can be higher depending on the specific company.
After buying the car and terminating the contract, you become rightful owners and re-register the TCP for yourself. The procedure is similar when buying real estate, commercial property for legal entities.
How is leasing different from renting?
Its main difference is that you have the right to buy the object at a residual, pre-agreed value. However, it is right not a duty, you can refuse to conclude a transaction. In the US, this practice is very popular: people use cars, leasing them, and after a certain period (say, a year) they change them.
How is leasing different from a loan?
Practically nothing, since the redemption value tends to zero, you will have to look for property to buy on your own, as well as negotiate with the seller.
Leasing is available for individual entrepreneurs and individuals, as well as any companies. However, when choosing the most attractive option, keep in mind the benefits of the transaction, the accrued interest, and whether they will agree to conclude an agreement with you. If there are doubts about your ability to pay, there is every reason to refuse.
Types of leasing
Depending on the terms of the concluded contract, the operation is divided into several types:
- Return lease- This is an unusual type of transaction that is beneficial to enterprises experiencing financial difficulties.
Example: a company that has machines at its disposal goes to a leasing office, where it is given a large amount of money for the "sale" of equipment. Then she enters into a leasing agreement, uses the machines and pays the funds under the agreement on a monthly basis. True, such a transaction is of close interest to the tax authorities and can sometimes be classified as fraudulent.
- Operating- the term of the contract is significantly shorter than the term of use of the object. In this case, all risks of loss, damage, the need for repairs fall on the shoulders of the leasing company, and the recipient of the property does not bear any responsibility. The interest here is higher, the redemption amount is much larger.
- Financial- if the previous option has similarities with a standard lease, the features of a loan prevail here.
Leasing companies: an overview of the terms of cooperation
It is necessary to start the execution of a leasing transaction by choosing a company that offers Better conditions work, is reliable, has a good reputation in the business field. Among the most popular offices are:
- UralSib– you can rent for cars, trucks, commercial vehicles, buses, trailers, special machinery and equipment. A prerequisite is an advance payment - from 10%, a period of up to 5 years, an audit of financial statements is carried out;
- VTB 24- it will be possible to buy equipment, real estate, wagons, boats and aircraft. The maximum value of the property 500 million. rubles, term - up to 5 years;
- RESO– transactions are carried out with cars and special equipment, no advance payment is required, and the purchase amount can reach 6 million. rubles, the term is limited to 4 years;
- Alpha- Collaboration available state support and subsidizing. Leasing of vehicles, equipment, real estate, special equipment, ships, aircraft and trains is carried out. The advance payment is 5%, the rates are from 14.7%.
Other large offices are also represented on the market; private firms operate in the regions, offering a limited range of services and small amounts. Many auto dealers have a separate department dedicated to this service, making it easier for buyers to deal.
Pros and cons of leasing
It is impossible to overestimate all the charms of leasing, because if you know the features of these programs, the benefits are obvious:
- For legal entities this good way reduce the tax rate, since expensive property will not belong to them. For individuals - and do not pay tax at all, because you are not the owner;
- It will be possible to insure the object on acceptable conditions;
- If you want to repay the entire amount ahead of schedule, this can be done without unnecessary losses and overpayments;
- The number of leasing companies operating in the market is huge, and it is quite possible to find worthy and favorable conditions in this list;
- No verification of financial solvency is required - however, interest rates are increased, and the size of the advance is increased;
- It is not required to leave a deposit - you freely use the property;
- It is not necessary to redeem the object, you can also terminate the transaction. This is a good way for car enthusiasts to test multiple cars. You sign a contract, use a vehicle, and when it gets boring, you change it.
However, when evaluating the pros and cons of leasing transactions, one should not forget that they also have significant disadvantages:
- Significant overpayment - even compared to a loan, the amount of payments is usually overstated;
- You are not the owner of the property until the full repayment of the debt and payment of the residual value;
- If payments are stopped, the contract is terminated, you will part with the money paid and with the object that you used. It does not matter if you paid 20% of its cost or 90%;
- The minimum term for concluding a transaction is one year.
It is difficult to assess what is more profitable: a loan, rent or leasing. It all depends on the terms of the particular transaction and the organization with which you cooperate. Often this method of acquiring property is the only option available when banks fail and the financial situation becomes more and more deplorable.
Leasing is a broad concept, although in Russian realities such transactions are not in demand enough, they have their own advantages. Considering the parameters of the conclusion of the contract, comparing all the offers that are relevant to you, you can understand whether it is worth cooperating with a company that provides real estate, cars, equipment or machinery on a lease basis with the right to repurchase, or it is more rational to look for alternative options.
The concept of leasing (“to lease” - to rent out (English)) is one of the types of financial services, the essence of which is to finance the acquisition of fixed assets (for example, a car, special equipment or equipment).
In post-crisis conditions, when obtaining bank loans is very difficult, and attracting long-term investments is a serious problem for Russian enterprises, leasing (financial lease) is the most efficient technology business development. It makes it possible to expand the production base of the enterprise, introduce advanced technologies into production, increase the company's fixed assets, and purchase the latest equipment.
What is the point of leasing?
The leasing company acquires ownership of specific property and transfers it to a third party for use for a long period. In this case, the seller is chosen by a third party - the consumer of this financial service.
During the term of the lease agreement, the consumer pays the cost of the acquired property plus the lease fee. After the specified time and payment of the agreed amount, the property becomes the property of the tenant. A pledge, unlike a loan, is not required in a leasing transaction, and a long installment plan significantly reduces the amount of payments and allows you to optimally manage the company's assets.
The uniqueness of this financial instrument lies in the fact that leasing perfectly combines the characteristics of a long-term lease and a financial loan.
The advantages of this type of investment activity for the consumer:
- Leasing allows you to reduce the taxable base of the enterprise, since all payments under the leasing agreement are included in the cost, resulting in a reduction in income tax.
- The entire amount of VAT under the contract is set off.
- As a result of accelerated depreciation of the leased asset, the amount of property tax is reduced by three times.
Video: handover of the first batch of new passenger buses in the Moscow region, purchased on lease
According to Rosstat, last year in Russian Federation investments in fixed assets increased by 6%. At the same time, according to independent financial experts, in 2010 the activity of the leasing market exceeded all forecasts. 46% of experts are convinced that in 2012 the leasing market will reach the pre-crisis level and reach one trillion rubles a year.
JSC Sberbank Leasing rightfully occupies a prominent place among leasing companies, providing a wide range of services throughout Russia. It is distinguished not only by the deepest knowledge of the specifics of the business, but also by its versatility and knowledge of the needs of customers.
Sberbank Leasing JSC offers its clients the acquisition of the following objects on lease:
The consumers of leasing services of Sberbank Leasing JSC are legal entities(representatives of large, medium or small businesses). The prerequisites for active growth in the consumption of leasing services were both macro- and microeconomic factors. First of all, it is stabilization in the country's economy as a whole. However, the reduction of interest rates and the availability of services also play an important role.
Currently, there is an expansion of leasing transactions in the regions of the country, a lengthening of the economic cycle of leasing and an increase in the terms of leasing in general. According to forecasts of analytical studies of the Russian financial market, Sberbank Leasing JSC has every chance to become one of the leaders in the leasing market.