How leasing companies work

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Small businesses and start-ups often do not have the financial ability to purchase the necessary equipment or upgrade the production base. It is quite difficult to get borrowed funds from the bank due to the lack of credit history or collateral under the contract. In this case, a leasing company may come to the aid of an entrepreneur.

Instruction manual

Leasing is a long-term lease with the ability to return or redeem property. The subject of leasing can be any real estate or movable property used for entrepreneurial activity, except for land and other natural objects.

Most often, the following leasing scheme is used. A private entrepreneur or commercial organization (lessee) selects the necessary equipment and a potential supplier. Then the lessee applies to the selected leasing company, which acts as the lessor under the contract. The lessee informs the lessor of the primary information about the necessary equipment, on the basis of which the leasing company calculates the amount of leasing payments and determines the terms of the transaction. The company includes its premium in the amount of lease payments. The relationship between the lessor and the lessee is drawn up by an agreement in which the type of equipment is fixed, the lease term and the amount of lease payments is determined.

A sales contract is concluded between the lessor and the equipment supplier, in which the terms and conditions of equipment delivery are fixed. A leasing company can purchase equipment using its own or borrowed funds. When using borrowed funds, a loan agreement is concluded between the leasing company and the bank. The funds received are transferred to the supplier in payment for the equipment.

In addition, an insurance company takes part in the leasing transaction, which acts as a partner of the lessor or lessee and provides insurance for various risks associated with the subject of the contract.

Ownership of equipment is usually reserved by the leasing company until the end of the contract. Then the lessee either returns the equipment to the leasing company, or gets it in the property.

Among leasing companies, highly specialized and universal ones are distinguished. Specialized companies lease only certain types of equipment, while universal companies work with any equipment.

Now in the Russian market there are many leasing companies. Each of them seeks to attract customers with favorable conditions. Leading companies with state participation are leading the market. Such companies are financed from budget funds and offer the most favorable leasing financing conditions.