Leasing. Definition and benefits

The foreign word "leasing" has long entered our lives. Today it is a fairly popular service. However, not every one of us knows the very meaning of the word “leasing”. The definition of this term hides an entire financial system. However, despite all the apparent complexity, the meaning of this word is quite simple, and it is recorded in the Law of the Russian Federation No. 164. Following it, leasing (the definition confirms this) is a type of investment activity for the purchase and transfer of property based on a special contract. According to him, an individual or legal entity is a tenant of this property for a fixed fee for a specified period and with the right to purchase it.

Of course, there is nothing complicated in this, except for the official meaning of the word. There are many other options for explaining the word leasing. The definition and meaning of them, however, always boils down to one thing - the investment of certain capital for the acquisition of property, which will subsequently be leased. Leasing is always side by side with loans, a rental mechanism and a variety of investments. Its mechanism itself includes three parties: investor, landlord and tenant. Leasing, the definition of which we now know, has its merits, and they can be considered. Experts assure that thanks to this service:

1. The problem of liquidity is mitigated.

2. The lessee gets the opportunity not only to increase their own production, but also to save both money and time.

3. There is no need to attract borrowed capital into production.

All participants in leasing relations can intersect with each other: the investor, by virtue of his duties, offers a loan to the lessor. The latter is not only a borrower. He also represents the owner of the acquired and leased property, which is transferred to the lessee in the form of an agreement.

Leasing services have some more advantages:

• the number of buyers from manufacturers of machinery and equipment increases several times;

• thanks to leasing, it is possible to save money on the purchase of expensive equipment from the manufacturer;

• obtaining certain benefits through leasing;

• the landlord no longer needs to pay the full amount for the equipment at once, so he may well send the remaining funds to other industries.

There are several options for providing such a service:

1. Financial leasing - a transaction that involves the return of all funds spent by the lessor during the term of the contract. In addition, depreciation payments are often charged at this time, and by the end of the contract period their amount can reach 100%.

2. Return leasing is an option in which the owner sells his equipment to a company and then draws up a contract for the rental of his own equipment.

3. Gearing. It is mainly used in the implementation of the most expensive projects, as it involves financing through several different channels.

4. Subleasing. A service option that is carried out with the help of several intermediaries.

5. Operational leasing. It is characterized by the fact that incomplete depreciation of equipment occurs with the condition that the lessee is obliged to monitor the integrity of the equipment.

According to the definition of leasing, it implies certain financial expenses. They are called leasing payments - this is the amount that the lessee must provide for the services received. Let's try to consider the main characteristics of leasing payments. They usually include:

1. Depreciation of property for the entire period during which the contract is valid.

2. Compensation paid to the lessor in calculating the funds used.

3. Commission.

4. Payment for additional services.

5. The cost of the property itself, but only if the point of purchase is specified in the contract.

Thus, leasing is beneficial and simple for everyone.