Financial leasing or credit: it is more profitable?

More and more local entrepreneurs use financial leasing in the development of their business.Whether you're buying real estate, transport or equipment, companies are trying to implement it at the lowest cost, to gain a competitive advantage in the market.That is why international financial leasing and has won such popularity, because often it is much more profitable to most credit schemes.More about the advantages and disadvantages, as well as trends in the leasing market, you will learn from today's article.

Financial leasing is, in fact, the leased asset with the right of redemption at maturity.The possibility of acquiring ownership of the object is precisely its distinction from operational leasing.For the client, the financial leasing is much more profitable, due mainly to the simplified procedure for its completion.Also in this case does not require collateral because property and so belongs to the leasing company.Financial leasing of cars has another advantage: the client may pay insurance premiums and make contributions to the pension fund in installments, which is particularly important for the newly established companies, the not yet firmly on his feet.

But most of all in the form of financing of domestic and foreign customers are attracted still the possibility of moving them to the right of ownership at the end of the contract period.It should be noted that the financial leasing involves the transfer of the leased asset to the customer on the period for which depreciated more than 75% of its original value.Upon termination of the contract, the company pays the remaining 25% and receives the fixed assets in the property.

Thus, financial leasing has the following advantages over credit:

1) lease payments reduce the amount of income tax;

2) absorbing the leased asset, the lessee reduces its tax base;

3) interest and commissions under the lease agreement does not need to pay VAT;

4) assets acquired in leasing can not be alienated by the tax authorities;

5) is not necessary in the design of the collateral;

6) The transfer of risk on the part of the lessor;

7) the possibility of payment of lease payments from the income to be derived from the operation of the leased asset.

to modern forms of financial leasing also include the return and credit leasing.The first form is commonly used by enterprises, lack the financial means.They sell their own leasing company property and then it can also be leased.Thus, these companies receive the necessary money, for example, for working capital.At the end of the contract period, they can redeem the property and use it further.With respect to credit leasing (leverage), then it is usually used for expensive projects.In this case, the lessor when purchasing equipment using borrowed funds, so the main risk is borne not it, and insurance companies, banks, investment and other financial institutions.