All about leasing

What is vehicle leasing?

In order to answer this question, let’s take a simple example – a transaction on vehicle leasing. There are several variants of leasing: financial, operational and returnable. Because of the Federal Law on Leasing, the most popular kind of leasing in our country is a financial one.

Financial car leasing is a form of obtaining of a vehicle on terms of a long-term renting with a subsequent right of repurchase. In the given transaction there are three parties: the supplier of vehicles – a showroom, the client –a lessee and the Leasing Company, financing the transaction - a lesser. The Leasing Company (LC) purchases the vehicle in lease from a showroom on the basis of the Purchase and Sale contract. In the contract it should be necessarily specified that the given vehicle is acquired in leasing for the purpose of its subsequent transfer to the third party (lessee).

The Leasing Company and the client conclude the Contract. By contract the lessee makes monthly payments onto the current account of the LC for the leased car. The proprietor of the car is the LC. The vehicle belongs to the LC until the client completely fulfills his contract liabilities. After that he becomes a legal owner on the basis of the Delivery-Acceptance certificate on the leased subject. Purchasing a vehicle in lease according to this scheme, the Company can legally optimize taxable basis. It is made through charging leasing payments as the cost price and through accelerated amortization of the leased subject.

Leasing or loan? What is the deference?

Leasing, unlike the loan, gives possibility of legal optimization of taxable basis of the enterprise. Its basic advantage is possibility to write off leasing payments as business expenses. Thus, base for calculation of the profit tax is lower in comparison with the loan where only interest is considered to be expenses but not the whole payment under the loan.

Among other advantages of leasing is high speed of transaction and availability of getting finance. The fact is the leased vehicle remains the property of the Leasing Company until the contract termination. It is also the basic security of the transaction. So when the borrower applies to the Leasing Company requirements to him are more flexible and loyal than in the bank that originates a loan. Besides, Leasing Companies usually have expert knowledge about the property which they lease. So they usually render a wide range of additional services to the client: operative search of the leased subject, professional advising on car leasing, insurance, registration, etc.

Can a natural person take a lease?

According to the Federal Law, the vehicle is leased to a natural person or to a legal entity for realization of business activity. Hence, leasing is accessible to natural persons who are registered as individual businessmen. Leasing for ordinary natural persons doesn't exist. The Leasing Company can remain the proprietor of the car only if the car is leased.

Is leasing available for companies working by simplified taxation system?

Real estimation of financial condition of the company that works by simplified taxation system is complicated. Nevertheless, requests from such clients are accepted and discussed in the CARCADE Leasing Co. on a common basis. But depending on the sum of transaction, additional security can be required from the client. It can be a guarantee from a natural person or a legal entity. Schedule of payments also can be changed. Terms of decision making and transactions are the same as for other clients.

Can a non-profit organization take a lease?

Leasing is available for the companies which are engaged in business activity. Non-profit organization can have vehicle leasing or real estate leasing:

  1. For the sake of the mission of the company.
  2. If business activity of the company is not prohibited.

Can a person who is just starting his own business take a lease?

Leasing Companies have more flexible requirements to borrowers, than banks. But to receive lease financing, the company should:

  1. Make profit
  2. Exist at least for one year

In case of starting your business from the ground up you can have problems.

What documents are necessary for making leasing contract?

For making contract with CARCADE Leasing the following documents are necessary:

  • Copies of constituent documents assured by the seal and signature of the CEO (notary certification is not required!);
  • Copy of the registered financial reports for the last financial year or for the last accounting period;
  • Copy of the documents confirming powers of the person, signing the leasing contract.