Every successful business requires constant expansion, constant increase in current and non-current assets, including equipment and vehicles. Often businessmen lack their own funds and they turn to the bank for a loan. But there is a more profitable and convenient way – this is leasing. Leasing for individual entrepreneurs and for legal entities is a great way to grow your business and increase revenue.
What is leasing?
The growing popularity of leasing in Russia has a positive trend. Unlike loans provided by banks, it is much easier to arrange leasing at companies specializing in this. There are various options for such a contract, for example, you can arrange a lease without a down payment on the minimum number of documents. In the leasing market, contracts for vehicles and cars, especially trucks, are the most popular, but cars purchased in this way are not so popular.
This is a great way to buy equipment for rent with the subsequent receipt of full rights to the goods, expand the scale of your business and be competitive in the market.
Who provides leasing?
At its core, leasing is a combined option of rent and credit. It is well suited to those companies that have decided to expand their production, but leasing is also beneficial for start-up entrepreneurs who still do not have enough money to buy machinery and equipment. There is a separate category of car leasing, according to which you can draw up a contract for a truck and a passenger car.
Companies that provide car leasing and other types of contracts do not make much difference with whom to work: with legal entities or individual entrepreneurs. Therefore, leasing for individual entrepreneurs is also a great way to buy equipment, equipment and machines for the production and expansion of the scope of services provided.
The main difference from the loan agreement is that the right of ownership to the repayment of debt belongs to the lessor, and the subject matter of the agreement is leased by the client. After repayment of loan debt, all rights are fully transferred to the client who has issued the lease agreement.
This type of service is primarily offered by commercial banks. They develop special leasing products for cars, equipment, and equipment. But there are large leasing companies that specialize specifically in leasing, including: Europlan, State Transport Leasing Company, TransFim-M and many others.
How to get a lease?
The procedure for obtaining leasing is similar to the procedure for processing a loan agreement in a commercial bank. You will also need to make an application and provide a package of documents, which we will discuss below. The conditions can be found both on the websites of leasing companies and on the websites of banks.
It should be noted right away that it will be somewhat more difficult to arrange leasing for an IP than the same contract for legal entities. As a rule, the leasing company will require reporting on the financial activities of the applicant. In any case, leasing will be a more profitable option for financing your business than a bank loan.
Leasing for individual entrepreneurs: basic conditions
Leasing companies set forth a number of conditions for individual entrepreneurs, which must be fulfilled in order to take advantage of this contract:
- Business must have experience – at least three months of successful activity.
- The total length of business operation is at least six months.
- It is necessary to provide documents confirming the status of an individual entrepreneur.
- The lessee must be at least 21 years old.
- If the subject of the contract is cars, then it will be necessary to make a down payment – about 20 percent of the cost of the car itself.
What documents are required?
Documents for car registration under the car leasing contract and for equipment leasing can be divided into two categories: those that are needed to make a decision on the part of the lessor, and those that are needed directly for the contract registration.
The set of documents for decision making includes:
- application for leasing;
- business financial information on a monthly basis (account turnover);
- accounting report for four periods;
- letter in free form about the direction of the company.
After considering the application and in the event of a positive decision, you will need to provide the following set of documents for processing the transaction:
- passport of a citizen of the Russian Federation;
- certificate that an individual entrepreneur is registered in the tax service (you can provide an identification code);
- information on credit and receivables;
- certificate of registration as an IP;
- extract from EGRIP.
In addition, the lessor reserves the right to request other documents, such as the conclusions of the accounting company, information about contractors, suppliers and others. As a rule, it is enough to provide copies of documents, but notarization of all certificates may be required.
Is it possible to make an agreement without a down payment?
Most offers from lessors imply a down payment, as this is a certain insurance for companies providing such services that the terms of the contract will be fully met. But there are a number of proposals, under the terms of which it is possible to issue a lease without a down payment.
This will require a number of conditions:
- Business success in financial terms, documented.
- Liquidity of the subject of the contract. But car leasing is quite difficult to arrange without a down payment.
- Providing collateral or surety.
It should be noted that there are offers from lessors for leasing without a down payment and without guarantors and collateral.
That is, the purchase of a new car for car leasing without a down payment can also be arranged if the business has a positive financial history.
How are payments made under the contract?
All conditions for the terms of payment, the amount of payment and the availability of the initial payment are determined at the time of signing the contract. The main criteria for these conditions are:
- when signing a leasing, it is necessary to make a down payment, which, as a rule, makes up from 20 to 30% of the cost of the equipment or car, in case of car leasing. If the initial fee is not provided, then, accordingly, there is no need to pay it;
- the recipient will then need to make payments to the account of the lessor on a monthly or quarterly basis, this is negotiated at the time of signing the transaction;
- The terms of the contract also establish the percentage of the fine in case of late payment. This is usually 0.1% of the amount of arrears for each day of delay.
After making all payments and repaying the loan debt, the lessee enters into full rights on the subject of the contract. In fact, this long-term rental ends and the car or equipment becomes the property. The advantage of such a deal is that you can rent a number of new cars for car leasing and upon completion of the agreement become the full owner of these cars, thereby expanding your business.
Some important details on the lease agreement
A lease agreement is a financial lease agreement, according to the Civil Code of the Russian Federation. But such an interpretation does not fully characterize the principle of the transaction. Financial lease in this case implies the elements of the loan. Leasing can be divided into types by the term of the contract:
- medium term;
- long term.
And also on the subject of a financial lease, it can be direct or indirect. Such an agreement is executed upon written agreement of the parties: the lessor and the lessee. All conditions and requirements, which include: the object of the agreement, loan amount, interest, term, and the rights and obligations of the parties, are required in the contract.
Also, the terms of the contract may stipulate a grace period during which the lessee reserves the right not to make payments, i.e. the lessor grants him a delay in payments, which can also be attributed to the advantages of leasing.
Let’s summarize all the pros and cons of leasing.
- This is a lease, after which the entrepreneur becomes the owner of the rental car or equipment.
- You can purchase both new cars and vehicles, as well as supported ones.
- Expansion of production will directly lead to additional profits.
- The interest rate is significantly lower than the bank offers for a business loan.
- You can draw up a contract, under the terms of which the service maintenance of equipment will remain with the lessor for the entire term under the contract.
- Fewer documents and a greater chance to get a positive decision than when you make a loan in a bank.
- If the lessee does not pay all the loan debt, the rights to the car or equipment will remain with the lessor.
- In the case of a car, until the end of the term of the contract, it can be used only by proxy.
- This is primarily a lease agreement, and all rights belong to the lessor for the term of the agreement.
We also recommend that you carefully review the agreement itself before signing it and assign all points of interest to the manager with whom the transaction will be executed.