What is the principle of work of leasing companies

The leasing market is developing very quickly, and many legal entities and individuals have positively assessed the benefits of working with leasing companies. If you need automotive or construction equipment, equipment - all this can be purchased on lease.

Instruction manual

1

Leasing is chosen today by many companies. Leading manufacturers of machinery and equipment provide the opportunity to conclude a contract. For the implementation of a leasing transaction concluded between the parties, several agreements are signed.

2

First, a lease agreement is concluded. At the same time (or later) a contract of sale of the leased asset is signed. This contract is concluded between the leasing company and the supplier. The obligations of the supplier are fixed - we are talking about the supply of equipment on time. In addition, the contract indicates: the cost of equipment, type of payment, delivery and installation obligations.

3

The text of the contract of sale in writing must be agreed with the lessee. When these two documents are in the hands of a leasing company, it can conclude a loan agreement with a bank or investor. Based on the contract, the bank allocates funds for partial payment under the contract of sale. As a rule, this is about 70% of the cost of equipment.

4

The lessee transfers the remaining 30% of the property value as an advance payment. Payment is made under a leasing agreement to the lessor. The funds that the leasing company receives at this stage are transferred to the supplier as payment for the purchase and sale agreement. The transfer of funds between participants in a transaction is often carried out in several stages. It all depends on the terms of the contract of sale.

5

The leased asset by proxy issued by the lessor is taken by the lessee. Risks associated with the use of the leased asset, as well as the subject itself, must be insured by the insurance company. The leased asset is pledged to the bank, but a security deposit is not required.

6

The contract is concluded for a specified period. During the validity period, the client uses the equipment for his own purposes and makes monthly payments, the amount of which is prescribed in the contract. In this case, the leased asset is owned by the leasing company.

7

If the client of the company violates the payment deadlines, the lessee has the right to pick up the equipment and sell it. With timely payment, after payment of the entire amount under the contract, the ownership of the equipment passes to the lessee. All income and profits that the client of the leasing company received when using the leased asset are the property of the client.

How does leasing work?