How Leasing Companies Work
How Leasing Companies Work
Small businesses and start-upsoften do not have the financial capacity to purchase the necessary equipment or update the production base. Obtaining borrowed funds from the bank is difficult because of the lack of a credit history or collateral under the contract. In this case, a leasing company can come to the aid of an entrepreneur.
Instructions
1
Leasing is a long-term lease withthe opportunity to return or redeem the property. The subject of leasing can be any immovable or movable property used for entrepreneurial activities, except for land and other natural objects.
2
Most often, the following leasing scheme is used. A private entrepreneur or a commercial organization (a lessee) chooses the necessary equipment and a possible supplier. Then the lessee applies to the selected leasing company, which acts under the lessor's agreement. The lessee informs the lessor about the necessary equipment on the basis of which the leasing company calculates the amount of leasing payments and determines the terms of the transaction. In the amount of leasing payments, the company includes its premium. Relations between the lessor and the lessee are formalized in a contract in which the type of equipment, the lease term is fixed, and the amount of leasing payments is determined.
3
Between the lessor and the equipment supplieris a contract of sale, which fixes the terms and conditions for the supply of equipment. The leasing company can purchase equipment at the expense of its own or borrowed funds. When using borrowed funds, a loan agreement is concluded between the leasing company and the bank. The received funds are transferred to the supplier in payment for the equipment.
4
In addition, it participates in a leasing transactionan insurance company that acts as a partner of a lessor or a lessee and insures various risks associated with the subject matter of the contract.
5
Ownership of equipment, as a rule,remains with the leasing company until the end of the contract. Then the lessee either returns the equipment of the leasing company, or obtains it in the property.
6
Among the leasing companies there arehighly specialized and universal. Specialized companies provide only a certain kind of equipment for leasing, and universal companies work with any equipment.
7
Now the Russian market is full ofleasing companies. Each of them strives to attract customers with favorable conditions. The market is led by leasing companies with state participation. Such companies are financed from the budget and offer the most favorable conditions for leasing financing.
