What is leasing in simple words? What is car or real estate leasing? What is return leasing?

The modernization of the socio-economic sphere, as well as the introduction of new management systems give rise to a need for qualitatively new methods of updating the funds of enterprises.

In the conditions of a decline in credit and financial relations and a reduction in state investments in the economy, there is a need for other types of injections into the manufacturing sector. That is why it is worthwhile to study in detail the question of what leasing is and to understand by what principles it occurs.

Why study leasing operations?

The main goal of this article is to study the nature and essence of leasing processes, models, types and forms of their manifestation in the context of the modern national economy.

What is leasing in simple words? This is the lease of long-term objects (cars, buildings, equipment, aircraft, etc.) for rent, that is, the transfer of a set of rights to own and use real or movable property for a certain (or unlimited) period for financial compensation.

This process most often consists of a tripartite complex of relations in which the leasing company is an intermediary between the equipment manufacturer and the company (or individual) interested in using it.

What is a leasing and a leasing transaction?

The economic concept considered in the article is quite complex, therefore the number of definitions is large. Translated from English, the verb to lease denotes the process of leasing property for temporary use. Summarizing the views of many authors, we can draw the following conclusion about what leasing is.

This economic term includes a set of processes for investing (attracting) financial resources in which one subject of relations (lessor) undertakes to acquire certain property from the manufacturer for the purpose of its subsequent transfer to the lessee for use for a specified period for financial consideration.

This process is carried out through a transaction, which is a set of agreements between the manufacturer (seller) of the leased asset, the lessor and the lessee.

The subject of such a transaction may be vehicles, buildings, structures, etc. movable and immovable property entire complexes and enterprises used in entrepreneurship. Also, the objects of these agreements may be land and other natural resources, if this is not prohibited by law.

Scheme of the operation

The answer to the question of what leasing is will help to study the methodological foundations of the transaction. The general mechanism is as follows:

1. The user (hereinafter referred to as the lessee) applies to the leasing company with an application for the necessary equipment.
2. The company providing this service evaluates the liquidity of the transaction. After that, the purchase of equipment (leased object) is made from its manufacturer or distributor.
3. After the lessor has become the owner of the equipment, he transfers it to the lessee for temporary use, receiving periodic payments for this.

Who are the subjects of leasing relations?

Parties to the transaction may be:

1. Property producer (seller) - a legal entity or an individual who enters into a sale and purchase agreement with a lessor, according to which he provides him with a subject of relations (equipment) within a specified period for a certain fee.
2. Lessee - a legal entity or an individual who, under the terms of an agreement, is obligated to pay for the services of a lessor and to receive equipment for a certain period of time under the conditions defined by this agreement.
3. Lessor - a legal or natural person who acquires certain property (for his own or attracted financial resources) and then provides it for a certain period of time for financial compensation in the form of the subject of a leasing transaction for temporary use to the lessee. At the same time, the right to the object of the contract can either pass into the hands of the lessee, or remain with the lessor, depending on the specifics of the agreement.
4. Credit institutions (banks, communities) that provide financial resources for the purchase of equipment under a contract.

As well as other specialized entities: insurance companies and the Russian Association of Leasing Companies (“Rosleasing”).

What features does Rosleasing have?

This association is a combination of banks, leasing companies and other economic institutions that are part of the Russian Association of leasing companies and carry out the following activities:

1. Coordination of activities and pooling of funds of participating companies in order to conduct the most profitable projects.
2. Interaction with government bodies in order to determine the most important strategic areas of leasing.
3. Development of legal acts regulating leasing activities.
4. Active participation in international processes of economic integration.

In the Russian Federation, both leasing for individuals and legal entities are legally regulated. Moreover, its subject may be residents and non-residents state, as well as enterprises with foreign capital.

Objects of leasing

Both the provision of fixed assets to companies and leasing for individuals imply the transfer to use of equipment, which can be conditionally divided into the following large groups:

1. Agricultural (tractors, combines).
2. Transport (cars, planes, ships, railway cars).
3. Construction (cranes, concrete mixers, scaffolding).
4. Communication equipment (satellites, radio stations, etc.).

What species distinguish?

1. Financial - a type of leasing that provides for a full refund of the value of the subject of transfer. In this case, the amount of transferred funds is divided into the price of the equipment and the income of the lessor. Thus, the condition for financial leasing is the transfer of equipment at the end of the transaction into the ownership of the lessee.
2. Operational is an agreement under which the lease term for a leased asset is less than the depreciation period. Unlike financial, after the expiration of the agreement, the equipment is returned to the lessor. Often this type of relationship is used for one-time promotions, when it is impractical to purchase equipment.

In what form are leasing transactions?

In order to understand what equipment leasing is, it is necessary to study its main forms:

1. Straight. A deal in which upon completion contract duration lease a full package of rights to the subject of the transaction passes into the hands of the tenant (lessee).
2. Returnable. What is return leasing? This is a transaction in which the lessee sells his funds to the lessor, immediately returning them in the form of a long-term lease. Used in case of shortage of working capital at the tenant. Upon the expiration of the transaction, the rights to the leased asset are returned to the lessee.
3. Mixed.With this type of leasing, the property required by the lessee is acquired at the expense of the share contributions of the participants in the transaction. At the end of the contractual relationship, the rights to the equipment are transferred to the lessee, whose starting share of investments usually does not exceed 25 percent.

Types of Lease Payments

What is leasing for physical persons? Firstly, this is a rather complicated procedure that raises many questions, especially regarding payment methods for equipment. The compensation scheme is the same for legal entities and individuals and is carried out through leasing payments. This concept includes the amount of compensation for the use of the subject of the transaction. Payments are made using the following methods:

• Fixing the total amount. The amount of the contract is divided into equal parts and paid annually during its term.
• Advance method. At the conclusion of the contract, an advance payment is made, which is indicated in it, the rest is paid according to the previous method.
• The method of minimum payments. The amount of the payment includes the calculation of depreciation for the entire period, as well as various remuneration of the lessor provided by him.

The payment schedule is specified in the lease agreement. Payments can be made daily, weekly, monthly, quarterly or annually.

What is car leasing?

A relatively new product in the market of financial services for the population is automobile consumer leasing. Every day he gains more and more supporters. Let's figure out what car leasing is for individuals.

First of all, it is a very convenient and profitable method of acquiring vehicles. In fact, a person rents a car with the right of subsequent redemption. Also, this service is popular for legal entities, who find it more convenient to make a purchase in several payments.

What is car leasing? For the population, this is an opportunity to use the machine immediately after completing a package of documents and making an initial payment. Today, this service can be provided not only by specialized companies, but also by banks, as well as car dealers.

The procedure for obtaining vehicles

1. Providing the client with a passport, driver’s license and filling out a special application.
2. The conclusion between the client and the lessor of a lease of vehicles with the right to purchase, as well as a contract of sale of a vehicle between the leasing company and the car supplier.
3. Payment of a down payment by the client in the amount of 20-30% of the value of the subject of the transaction.
4. Car insurance by customers under CASCO and CTP insurance rates.
5. Registration of a car by specialists of a leasing company in the traffic police, as well as conducting a technical inspection.
6. Transfer of the vehicle by the company to the consumer.
7. The client, according to the terms of the contract, makes regular payments, after the expiration of the term the technician passes into his possession.

Who can buy a car in this way?

Any citizen who has experience in entrepreneurship can get a car for rent with a subsequent right to purchase. Moreover, preference is given to candidates with successful experience in leasing operations with sufficient financial potential.

It is very important to consider all the pitfalls that car leasing has for individuals. Testimonials of people who have used this service contain both positive and negative evidence.

Pros of car leasing

1. The possibility of acquiring not only a car, but also a truck, as well as special equipment. It doesn’t matter if the new equipment is either used in the salon or from a private trader.
2. To conclude a leasing transaction, a minimum set of documents is sufficient, while the level of demanding customers is low.
3. Car design takes place for a period of up to 5 years, after which the tool can be redeemed at a residual value. Early return of the subject of the transaction is also possible.
4. The conditions for the acquisition and delivery time of equipment to leasing companies are more convenient than standard ones.
5. What is car leasing for the population? This is, first of all, flexible payment schedules and the ability to immediately start the operation of the vehicle.
6. In case of unwillingness to arrange the equipment for yourself, this service is also available to the client, since the car is considered the property of the lessor.

Cons of car leasing

1. The interest on leasing agreements is greater than on car loans (especially for low-budget vehicles).
2. The possibility of seizing a car in violation of leasing payments.
3. The inability to rent a car or as collateral without the consent of the company that provided the leasing services.
4. The need to provide periodic access to inspect the subject of a leasing agreement.

Thus, when deciding on the choice of a vehicle acquisition method, it is necessary to carefully study all the related factors, as well as the current socio-economic situation.