Leasing and credit make it possible to use the property before paying its full cost. Gradual refund for the required product - general description and plus of both financial products. Avoiding the pitfalls and choosing the right service will help study the question of how leasing differs from a loan.
Content:
Difference 1. What does a client get?
Under the loan agreement, the client receives money to purchase property — a car, a land plot, equipment, an apartment. After a positive decision on granting a loan, he chooses the goods. The customer buys, the bank makes payment for it. The borrower gradually repays the debt of a financial organization.
Leasing agreement involves the receipt of property. The purchase is made by the leasing company, not the client. The lessee for a certain fee temporarily uses and owns the goods. When choosing an additional source of financing, it is worth considering the main common minus of a loan and leasing - the need for overpayment.
Difference 2. Property and insurance issues
A simple example is the purchase of a vehicle. When buying a car on credit, a bank customer becomes its owner. The vehicle acts as a pledge. Under the lease agreement, the lessor remains the owner.
Ownership after the end of economic and legal relations can be transferred to the lessee. In this case, the redemption price of the subject of the contract is included in the total amount.
Another difference between leasing and auto loan is related to the property issue: who is engaged in vehicle insurance. By concluding an agreement with the bank, the client undertakes to insure the car on risks:
- theft
- damage
Some organizations issue cash without CASCO. However, this exemption implies a significant increase in the interest rate, the size of the down payment (from 15% to 40%). Legal relations of leasing relieve the client from the need to deal with insurance issues. Their lessor as the owner decides independently.
Difference 3. Financial benefits to business
Russian legislation provides for financial benefits for leasing entities. Therefore, legal entities, individual entrepreneurs in the search for additional cash choose a financial lease. Favorable differences between leasing and credit are discussed in the table.
| Options | Credit | Leasing |
|---|---|---|
| Depreciation type | Standard accrual method | Accelerated depreciation, reduction of income tax is possible. |
| Depreciation period | 5–7 years after property repayment, property tax payments are required | Corresponds to the term of the lease agreement |
| Property tax | No savings | Savings due to accelerated depreciation |
| Account balance | Customer only | Client or lessor by agreement |
| What is attributed to company costs | Loan interest | All payments under the contract |
Leasing payments can be made by products that are leased (specific equipment) and has a natural form. The contract often provides for additional work and services. Within one legal relationship, one person may be a seller and a lessee.
Finance leases can be international and domestic. The significant minus of leasing of a legal entity, IP is considered to be high customs duties provided for when importing equipment. Other disadvantages of a financial product:
- a small number of leasing companies
- limited range of products (usually enter into a contract for equipment, vehicles)
- land plots, natural objects can not be the subject of a contract.
Difference 4. Which is more profitable for legal entities and individuals
In simple terms, leasing is an opportunity to own and use the necessary property on financial terms that are favorable to one’s own business. The service includes the following elements:
- lease
- loan
- investment
Since 2011, the product has become available also to individuals. Now the subject of a financial lease can be used not only for business purposes. However, due to the possibility to reduce the taxable leasing base, it is more profitable to use legal entities, individual entrepreneurs.
For individuals, credit is the best option. The client gets acquainted in advance with the size of payments, calculates his possibilities on the basis of income. Attracts co-borrowers, guarantors. Aware of their own responsibility for the use of property, trying to earn more.
The table briefly presents the differences between leasing and credit:
| Options | Leasing | Credit |
|---|---|---|
| Subject of the contract | Property | Cash |
| Who is the owner | Leasing company | Customer |
| Financial benefits | Are provided | Absent |
| Who is the product for? | Legal entities, IP | Individuals |
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