What is leasing and how does leasing differ from a loan or a lease?

Modern motorists are really lucky. Anyone who wants to purchase a vehicle can choose to purchase a lease, or take money for a purchase loan. We propose to find out what leasing is, what advantages it has and whether it is operational leasing.

Leasing - what is it?

Often, those who wish to issue a loan are interested in what is meant by leasing. By this term we mean a certain type of investment activity aimed at acquiring property, as well as transferring it on the basis of a special leasing agreement to both legal entities and individuals for the agreed payment for the required period and on the necessary terms that are stipulated by the contract. In this case, the recipient of leasing can, if desired, buy back the property. There is a leasing of real estate, car and other necessary facilities.

How does leasing work?

For some, the concept of leasing is complex and not fully understood. However, in reality the working mechanism of this type of investment activity is simple and looks like this:

1. The lessee must apply to one of the known leasing companies with his application for the necessary equipment.
2. The company providing this service will undertake to assess the liquidity of a particular operation, after which the equipment will be purchased from the distributor or the manufacturer.
3. When the lessor has already become the owner of the equipment, he can transfer it for a certain period to the client's use, for which he will receive periodic payments.

What is a car leasing?

A relatively new service in the modern market is car leasing. Every day he has many admirers. This method of buying a vehicle can be called very convenient and even profitable, since a person rents a car and has the right to redeem it in the future. This service has gained popularity among legal entities, for which it is convenient to make purchases using several payments. For the population this is a unique opportunity to use the machine after the package of documents has been drawn up and the initial payment has been made.

Leasing - the pros and cons

This type of investment activity can not be called uniquely positive or insufficiently acceptable. There are advantages and disadvantages of leasing. One of the significant advantages of leasing - there is no need to leave a pledge, which is sure to please every client. Its disadvantage can be called a high overpayment in comparison with loans.

Pros of leasing

Many clients of specialized firms know what is leasing and they know what is the benefit of leasing:

1. Low tax rate and the ability to insure on acceptable terms.
2. The client may early repay the lease before the end of the contract without significant overpayments and losses.
3. If you wish, you can partially repay the loan. In this case, the rest of the amount is recalculated for a shorter period.
4. In some cases insurance is optional, and sometimes this is one of the main criteria.
5. The best solution in cases where you need as soon as possible to buy new equipment, or a car, and to reduce the speed there is no such possibility. So you can continue to reinvest profits and develop the business by paying the same parts of the total amount.
6. There is no need to leave a pledge.

Less leasing

Speaking about the advantages of this type of investment activity , it is important to dwell on the disadvantages. Experts identify such major disadvantages of leasing:

1. High overpayment. If you take in comparison with other forms of lending, then overpayment is significant.
2. Not a very rich market for leasing services. In some regions and cities it is difficult to find a company that provides such services.

What is the difference between leasing and renting?

Such concepts as leasing and leasing are forms of financial relations between legal entities, where one party pays other property for temporary use. Thus distinguish such differences:

1. During the lease, the object of the transaction must be redeemed, and when the lease expires, it is returned to the lessor.
2. The leasing contract is usually concluded for a very long period, and one object is the property of one lessee. The same can not be said about renting.
3. Land plots can be leased, but not leased.

How does leasing differ from a loan?

Those wishing to become owners of any property on favorable terms are often interested in what a difference in leasing is from a loan. Specialists call such basic differences:

1. The subject of an agreement in leasing is property, and in lending - money.
2. The owner of leasing is a leasing company, and the owner of a loan is a client.
3. Leasing provides for financial benefits, and lending does not.
4. Leasing can be suitable both for legal entities and individual entrepreneurs, and lending is available to individuals.

Leasing or credit - which is more profitable?

Credit and leasing have their pros and cons. There are such basic advantages of leasing:

1. Time of decision making and execution of the transaction is much shorter than when lending.
2. The contract for leasing is for a longer period than when lending.
3. There are various schemes for repaying leasing payments.
4. The company pays the costs for customs payments and insurance.
5. When leasing there is no need for a property tax.
6. The leasing holder has the right to exchange the car, terminate the contract and return the vehicle.

How to take leasing?

Those wishing to become car owners are often interested in how to take cars for leasing to individuals. To do this, you need to issue an application for obtaining the necessary equipment or a car for leasing. To such document, attach a notarized copy of the organization's balance sheet for the last time. Based on the provided documents, the company will be able to make a preliminary decision. If it proves to be positive, the company will be able to provide as a review the calculation of payments for leasing and a list of all documents required for the contract:

• copies of the company's charter certified by the notary;
• certificate of registration and entry into the unified state register;
• a photocopy of the passport of the manager;
• a copy of the order for the appointment of the chief accountant;
• financial documents;
• Bank statements showing the income of the organization for the last five periods;
• information on business contracts and loans.

In this case, each specialized company can have its own package of documents. For this reason, it is necessary to clarify before submitting. After she examines and analyzes the financial strength of the lessee, she will immediately report her final decision. After that, there will be a difficult part of processing the necessary documentation. It will be necessary to draw up a special contract of sale, a contract and insurance for a particular property. Often these issues are handled by special leasing companies.