Leasing and credit make it possible to use the property until payment of its full value. Gradual return of money for the necessary goods is a general characteristic and plus of both financial products. Avoiding pitfalls and choosing the right service will help you to understand the difference between leasing and a loan.
Contents:
- Distinction 1. What the client receives
- Difference 2. Property and insurance issues
- Difference 3. Financial benefits to business
- Distinction 4. What is more profitable for legal entities and individuals
Distinction 1. What does the client receive
Under the loan agreement, the client receives cash onpurchase of property - car, land, equipment, apartment. After a positive decision on granting a loan, he chooses the goods. The customer buys, the bank pays for it. The borrower gradually repays the debt of a financial institution.
The leasing contract involves the acquisition of property. The purchase is made by the leasing company, not by the client. The lessee temporarily uses and owns the goods for a fee. When choosing an additional source of financing, it is worth considering the main general minus of the loan and leasing - the need for overpayment.
Difference 2. Property and insurance issues
A simple example is the acquisition of a vehicle. When buying a car on credit, the client of the bank becomes its owner. The vehicle is a pledge. Under the leasing agreement, the lessor is the owner.
The right of ownership after the termination of economic and legal relations can pass to the lessee. In this case, the redemption price of the subject of the contract is included in the total amount.
With the issue of property connected another difference between leasing and car loans: who deals with vehicle insurance. When concluding a contract with the bank, the client undertakes to insure the car against risks:
- theft
- damage
Some organizations issue cash without CASCO.However, this advantage implies a significant increase in the interest rate, the amount of the initial contribution( from 15% to 40%).Legal relations of leasing relieve the client of the need to deal with insurance issues. Their lessor as the owner decides independently.
Difference 3. Financial benefits to business
Russian legislation provides financial incentives for subjects of leasing relations. Therefore, legal entities, individual entrepreneurs in choosing additional funds choose a financial lease. Favorable differences of leasing from a loan are considered in the table.
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Lease payments may be made products that made the object of lease( specific equipment) and has a natural shape. The contract often provides for additional works and services. Within one legal relationship, one person can be a seller and a lessee. Financial leases can be international and domestic. A significant disadvantage of leasing a legal entity, IP is considered high customs duties, provided for the importation of equipment. Other shortcomings of the financial product:
Difference 4. What is more profitable for legal entities and natural personsIn simple words, leasing is an opportunity to own, use the necessary property on favorable financial conditions for your own business. The service includes the elements:
Since 2011 the product has also become available to individuals. Now the subject of a financial lease can be used not only for entrepreneurial purposes. However, because of the possibility to reduce the tax base, leasing is more advantageous for legal entities, individual entrepreneurs. For individuals, credit is the best option. The client learns in advance the amount of payments, calculates its opportunities, based on income. Attracts co-borrowers, guarantors. He realizes his own responsibility for using property, tries to earn more. table summarizes the differences is the leasing of the loan:
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