Today, a banking operation called "leasing" is becoming more widespread. However, as elsewhere, there are some drawbacks here. So what is leasing and what advantages and disadvantages does it have?
What is leasing
The word "leasing" came to us from the English language and in translation means "rent". This procedure became widespread in Russia about 10 years ago.
Thus, leasing is one of the forms of credit, in which the property is transferred into a long-term lease with the subsequent right to purchase or return.
As a rule, any movable and immovable property can 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 amortization period for such real estate is 10-15 years.
On the one hand, leasing is very beneficial for starting and expanding businesses. It allows you to purchase the necessary equipment in the shortest possible time, significantly reducing the initial costs.
However, it is interesting that leasing interest rates can often turn out to be 2-4% higher than the rates for obtaining a loan. But, on the other hand, leasing helps to significantly save on taxes, since according to Chapter 25 of the Tax Code of the Russian Federation, all payments under lease agreements fully reduce income tax.
Leasing advantages
Based on the above, we can conclude about the main advantages of leasing. Since lease 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 activities.
Disadvantages of leasing
However, this procedure has significant disadvantages. As a rule, the final lease amount is much higher than the purchase of equipment on credit. In addition, payments are binding and are made on time, regardless of the condition of the equipment. In addition, according to the lease agreement, the bank requires an advance payment of 25-30% of the value of the entire transaction. As a rule, the amount is quite significant.
