What is leasing: benefits

Today, a banking operation called "leasing" is becoming more widespread. However, as elsewhere, there can not do without flaws. So what is leasing and what are its advantages and disadvantages?

What is leasing?

The word "leasing" came to us from the English language and means "rent" in translation. This procedure was widely used in Russia about 10 years ago.

Thus, leasing is one of the forms of credit in which the property is transferred to a long-term lease with the subsequent right to buy or repay.

As a rule, any movable and immovable property may be leased. For example, buildings, special equipment, transport, communications. However, as practice shows, it is quite difficult to arrange leasing for real estate, since the financial lease that a bank can provide is only 5-6 years, and the minimum depreciation period for such real estate is 10-15 years.

On the one hand, leasing is very beneficial for opening and expanding enterprises. It allows you to purchase the necessary equipment in the shortest possible time, significantly reducing initial costs.

However, it is interesting that leasing interest rates can often turn out to be 2-4% higher than loan interest rates. But, on the other hand, leasing helps to save significantly on taxes, since according to Chapter 25 of the Tax Code of the Russian Federation, all payments under leasing agreements reduce the profit tax in full.

Benefits of Leasing

Based on the above, we can conclude about the main advantages of leasing. Since leasing payments are not considered production costs, this significantly reduces income taxes for the lessee. In addition, leasing is quite convenient in terms of payments. As a rule, after agreement with the bank, it is possible to make payments after receiving proceeds from the sale of goods. In addition to all of the above, leasing allows you to acquire expensive assets without diverting significant amounts of funds from economic activity.