👩🏻‍🤝‍👨🏽 💃🏻 🚘 What is leasing in simple words? 🚵🏼 🍴 💇🏾

Currently, many foreign words have come into our everyday speech: leasing, marketing, coaching and many others. And this is normal. What is leasing (derived from the English word to lease, which translates as "rent") in simple words? Let's try to explain to those who are interested in this issue. In short, leasing is the rental of housing, equipment or vehicles with the possibility of redemption in the future. That is, it is such a financial instrument that perfectly combines two possibilities - both long-term lease and purchase. Read more about all aspects of this issue in the article.

Essence

Not sure what leasing is? Everything is very simple. The leasing company, having acquired certain property from the seller (for example, real estate, equipment or vehicles), transfers it for a long period to the consumer (that is, to a third party in this chain).

Important! It is the client (that is, the consumer of the financial service) who selects the seller.

During the entire term of the leasing agreement, the client (or lessee) constantly and systematically makes payments, in no case missing them (otherwise he may be left without goods). If by the end of the contract the consumer fully pays the cost of what he rents; as well as a certain amount of money (which was agreed earlier and recorded in the document) of the leasing company for the opportunity to exploit it, then the property becomes the property of the lessee legally.

Such a financial instrument is extremely beneficial to small firms. When leasing, the down payment for the possibility of using the leased property is about 20-30% of its total value. Moreover, the organization involved in leasing takes part of the costs for itself. After 5 years (it is for such a period that they most often conclude contracts), this small company becomes the sole and full owner of the property it rents.

How leasing differs from a simple lease

What is a rental? You temporarily, for a certain amount specified in the contract, use some property belonging to the lessor. Payments are made every month, but are exempted from the down payment. At the end of the lease, you simply return the leased item to its owner and all.

And what is leasing in this case? This is also a kind of lease, only with the right to redeem the property or its phased acquisition in full ownership.

Important! Firstly, leasing without a down payment is not possible. Secondly, the lessee can become the full owner of the leased property only after its full redemption.

How leasing differs from a loan

And in the case of leasing, and in the case of a loan, in order to receive property for use, the consumer must make regular payments previously agreed and recorded in the document, which ultimately will cover the full cost of the subject of the contract. This is what unites them. But there are differences:

By purchasing a property on credit, the borrower immediately becomes the owner. During leasing, during the entire term of the agreement, the object continues to remain in the lessor’s property and can change the owner only after a certain time.
In case of a leasing transaction, a security deposit is not needed. Credit can not boast of this. In addition, a long installment plan during leasing significantly reduces the size of payments and thereby makes it possible to manage the consumer's assets of his company in an optimal way.

The credit institution gives the borrower money to purchase a certain property. The lessor himself acquires the leased asset and transfers it to the consumer for use with the right of subsequent redemption.
The costs of servicing and maintaining the subject of the loan are borne by the borrower. In the case of leasing, all such events can be taken by the lessor. And maybe not take it - that's how you agree.
The package of documents for obtaining a loan is much larger than with leasing. Yes, and the down payment amount is much higher.
The interest rate on the loan and the total value of the property (compared to the real price) is much higher than with a leasing transaction.

On a note! The total cost of the leased asset consists of the real price and the cost of service.

Types of leasing

Depending on what actions the leasing transaction ends, there are two types of it:

Financial. The essence of this type is that the consumer agrees to buy it at the specified price specified in the contract at the end of the lease for the leased asset. That is, to become its full and sole owner. As a rule, property is costed to the lessee at a residual price, which is obtained by deducting the already paid lease payments from the total value.
Operational. In this case, it is understood that the lessee does not pay the leased asset itself, but exclusively rents it. Upon the expiration of the contract, the property shall be returned to the lessor.

There are three types of financial leasing:

Partial. In this case, it is the lessee who pays all the costs associated with servicing the leased property.
Full. In this case, the lessor assumes all costs associated with servicing the leased asset.
International (the contract is concluded by companies from Russia and other countries) or domestic (the parties to the leasing transaction are only Russian enterprises).

For individuals

And what is leasing for individuals? In short, this is a financial lease, in which an individual can use either the right to purchase, or a phased acquisition of the property. And in more detail, it looks like this:

Any citizen of our country who has not been able to accumulate the necessary amount for the acquisition of real estate, and who has been denied credit (or does not want to do it himself) can simply contact the leasing company with an application for leasing certain property to him.
The request of an individual is considered in the company and conclude an agreement with him. According to the terms of the agreement, the lessor acquires the property indicated by the lessee, and then transfers the object to the citizen for use for a certain fee and for a specific period.
At the end of the transaction, an individual can either redeem the leased asset at its residual value, or return it to the lessor.

Everything is very simple and affordable. That is, it turns out that leasing for individuals involves the entry of any citizen of Russia (if he wishes) into a leasing relationship, subject to the observance of all the conditions of the contract.

Documents required to apply for leasing for individuals

List of required documents:

An identity document, i.e. a civil passport and a copy of it (all pages without exception).
Application form completed without errors.
The second identification document and having a photo (for example, a passport).
A certificate indicating the sources of income (for example, an employment contract or a copy of the work book).
A document indicating the total amount of income for a certain period (for example, reference 2 personal income tax).

On a note! First: in leasing relationships, the age of the client does not matter. Second: in the event of such a transaction, the lessor’s risks are reduced to zero, since in case of non-payment to the lessee, they simply refuse to rent, and in any case, the property remains in the ownership of the service provider.

Leasing for legal entities

Leasing for legal entities is nothing more than a legal relationship between a company and a leasing organization that provides equipment, vehicles and objects with the right to buy them in the future on long-term rental terms.

This is a very convenient financial instrument that allows you to quickly acquire, without distracting fixed assets, a certain property, thereby reducing the tax burden. It is this factor that is determining when choosing bank lending or leasing.

Necessary documents for registration of a contract for a legal entity

When concluding a leasing agreement, the package of documents includes copies of the balance sheet for the last five reporting periods (to be more precise, quarters) with a mandatory mark from the Tax Inspectorate, an extract from the Register of Shareholders (if it is a joint-stock company), and copies of the following documents:

Help with an accurate indication of the company's open accounts;
certificate of registration with the tax authority;
civil passports of leaders, the chief accountant and all those who have the right to sign documents;
certificate of state registration.

Advantages of leasing for legal entities

When concluding an agreement with a leasing company, legal entities have a lot of advantages:

At the same time does not require large financial costs.
Very often, service providers offer good discounts on leasing.
There is a quick update of production facilities.
You can count on the help of service providers in terms of customs clearance of cars in leasing or equipment, as well as their registration.
A fairly flexible system of negotiated payments, which takes into account many features of the business (for example, its seasonality).
The tax burden is being optimized by reducing the tax base.
The service provider provides warranty service for leased cars, equipment or machinery being leased.
Upon the expiration of the agreement, the lessee can either return the property to the service provider, or redeem the leased leased asset, or exchange it for a similar, but only new. That is, the consumer has three options for dealing with the object.

What is a contract?

Any agreement fixes the main points of interaction between the parties (in our case, it is the lessor and the lessee). This document should include the following items:

Details of the parties to the transaction and contact numbers.
Full description of the subject of the transaction.
The duration of the finance lease with an exact indication of the terms.
The procedure for payment of payments and the amount of payment.
Obligations of the parties, that is, the lessor and the lessee.

On what conditions, upon completion of the transaction, property will be returned or redeemed.
In which case is it possible to terminate the contract.
Additional conditions that depend on what is specifically the subject of leasing.
Penalties
The date of signing the contract and signature (with decoding) of each of the participants.

Important! A signed leasing agreement must be registered with Rosreestr.

Subtleties of registration of vehicles

When a car is leased, the following points are fundamental:

Initial (advance) installment. It must be entered in the name of the lessor before the transfer of property to the lessee. This should be fixed in the contract. The amount may be about 50% of the value of the leased asset. If the consumer pays a large amount, the tax authorities can re-qualify the leasing agreement for the purchase and sale agreement (with installment payments) with all the ensuing consequences.

Important! An offer with a zero down payment should alert you. This is extremely rare.

Duration of finance lease. It can be 1-5 years.
The procedure (i.e., schedule) for making monthly payments. Their size, as a rule, is about 5-6% of the total price of a vehicle.
Determination of the residual value of the property. It can make up 70-80% of the price of a car.
Operating expenses (i.e., transport tax, current repair of vehicles, its technical inspection, as well as traffic police fines). All this can be “taken over” by the lessee. If these costs are paid by the lessor, then the cost of maintenance will be added to the total cost of vehicles.
Restrictions associated with certain actions in relation to the subject of leasing. This refers to a ban on the departure or export of vehicles abroad, without having completed the preliminary approval and registration of the vehicle as an inheritance or pledge.
Seizure of the leased asset. This can happen at any time (of course, during the term of the leasing agreement) if the contractual terms are violated to some extent. Only in this way and nothing else. Yes, car leasing is an uncompromising business.

On a note! In the event of seizure, no proceedings will take place. Do not even wait. The vehicle is simply seized. Moreover, the return of the already paid amounts is not provided.

Possible penalties. They can follow in case of damage to the property of the lessor. And this is fair.

Car leasing as a financial instrument has long been known. But, strangely enough, they were used mainly by a legal entity. According to many experts in the automotive market, now is the time when individuals are starting to enter into leasing relations. Why not? Moreover, leasing a car for individuals has many advantages.

Subtleties of real estate leasing

This service is just starting to gain popularity. Although before, the law did not prohibit the use of real estate as a leased asset (for example, a cottage in the country, an apartment, or even non-residential premises). Moreover, the value of the object can reach up to 50 million rubles, and the term of the contract can be ten years. Currently, the relevance of real estate leasing is associated with the fact that it has become available to individuals. Life does not stand still.

Banks began to offer people leasing in respect of housing, the procedure for which is not much different from a standard contract. To understand what real estate leasing is, let's look at the algorithm of actions in such legal relations:

The consumer finds a suitable property.
The Bank, based on a statement from the client, buys housing for its own money and transfers it to the lessee on a finance lease.
Upon the expiration of the agreement, the consumer buys the property at its residual value.

Important! The return of property can be made only in case of financial insolvency of the lessee. In the event of such situations, two contracts are initially concluded with the client: one for the purchase of housing with deferred payment and the second, providing for long-term rental of real estate and with its purchase in the future.

Finally

Leasing of equipment, vehicles or real estate as opposed to bank lending is a fairly effective financial tool that allows you to grow your business. With it, you can expand production capacity and introduce new technologies into production. Of course, with such legal relations, there is a certain specificity of accounting leasing transactions, which fully depend on the terms of the contract.

What is leasing in simple words?