What is leasing?

The word "leasing" comes from the English leasing - "rent." This is a financial instrument that helps enterprises and individuals to acquire a particular item. Literally, leasing is the provision of long-term rents for a car, housing, equipment, building with the possibility of their subsequent acquisition.

The contract is concluded between the lessor (a company that provides equipment for rental for a long time) and the lessee (a tenant who pays a fee for using the equipment). After the contract expires, the lessee is entitled to enter into a new contract or extend the old one. Also, the lessee has the opportunity to purchase equipment at a residual value.

The purchase of equipment for this type of contract allows you to reduce the tax burden of the company (in the regulation of income tax). The subject of leasing are non-consumable items (buildings, equipment, enterprises, vehicles, structures and other real estate and movable property).

The income of the leasing company consists of the margin that it makes on equipment (banks operate in a similar way, providing loans to their customers). This margin can be significant, at the end of the lease the client receives the equipment itself at the lowest cost (and in some cases free of charge).

Possible options for international leasing. In this case, the companies that conclude the contract may be located in different countries. In this case, even industrial enterprises and production facilities can be leased. The only condition should be their subsequent commercial use for profit and the provision of services. But in Russia from January 1, 2011, this condition is not mandatory.

Distinguish financial leasing when, after the expiration of the contract, the subject of the contract (equipment) is transferred to the lessee for free; and operating leasing, when the equipment is bought out by the lessee upon expiration of the contract.

The exception in this case is only natural objects and land, which have a special treatment.

What is leasing?