Leasing as the best alternative - the difference between theory and practice

In the first appearance of the leasing market is usually mentioned in a negative context, and it took considerable time and effort to build up his positive image.

Affair "Trend" pressuring the beginnings of development leases in our area, but there were plenty of problems with the registration plates. Specifically, it was impossible not to have subsidiaries registered marks another city, and there has not been possible in the transport vehicle under the note book type lessee.

Due to lack of capital in our market leasing despite high interest rates, ie the coefficients slowly and steadily began to play the roots of the banking market. Liberalization of the Croatian economy in our market for the first time there have been some hitherto less known and used forms of financing. One of these forms of developed market economies, and certainly is leasing in western countries, often the best alternative to bank loans.


Philosophy of leasing

Leasing means the business relationship in which the lessor gives the lessee the subject (eg vehicles) in use at certain times and use of the lessee. The lessee undertakes to pay the contractual amount agreed installments. The basis philosophy is actually leasing the idea of using a profitable investment goods are flexible with payment adjusted to the needs of the lessee - "pay as you earn (pay when you earn).

In economic terms of leasing a suite of services that the lessee can provide some good investment property through a certain period of time.

The advantages of leasing as a form of financing are:

L iquidity
E Cost-effective extension of credit frameworks
A ctivation of investment goods with the lessor
S Reducing tax liabilities
I nnovation and business use
N Dedicated customized timeline
G Annual clear financial calculations.


Freedom Business

Leasing is also a interesting product that allows the user to an investment without binding capital, successful business and marketing of fixed assets and capital in the areas of highest possible efficiency. In this way keeps the credit framework by parent banks and strengthen the liquidity of the total business.

The big advantage of leasing is that it immediately and can respond well to all technical, technological and other changes in the market. Capital goods that are always at the highest technological level and indeed that the statute of limitations, which often has a decisive role in the market. With all that leasing represents a tax break and its nature allows each potential lessee complete independence and freedom of business. Leasing is a special arrangement for the lease of a good investment in which the lessee undertakes to carry out a series of payments the lessor, and duration of the lease or rental.

Leasing is defined as an agreement confirmed in writing that the contract allows the renter to use the leased property without transfer of ownership documents. It is a special form of medium-and long-term financing companies and other legal and natural persons. How frequently does not appear in the balance of proceeds recipient, leasing is also called hidden debt. There are various forms of leasing, which can roughly be divided into operational (business) and financial leasing.


The basic categories of leasing

In its development of leasing as a way of financing recognizes five basic categories:

  1. Leasing as an alternative form of financing
  2. Leasing as a form of financing without the accent over the acquisition of property
  3. Leasing with a residual value
  4. Releasing
  5. Leasing = service

In the first stage of development leasing deals with the lease as a simple and alternative forms of financing to the classic lines of credit and other conditions specific to a particular market. Then come to the fore of the tax advantages of leasing without the emphasis on the acquisition of property. The Croatian market is currently at the second step with a good indication that it will soon introduce a lease with the rest of the value of what is known in Western countries. Here is primarily thinking of leasing with residual value, lease with limited mileage and lease with option to purchase. 

The advantage of such forms of financing are sure that it is a rule of the lessee only a financial burden for the lost market value of investment goods plus interest. In most European countries entered into leasing contracts for 36 months and 70% of the actual contract makes the operating lease with a residual value. 

If the financed vehicle leasing with residual value fails to close the financial structure, the lessee shall reimburse the loss incurred, thus bears the entire risk. In the fourth stage of development leasing deals with the releasing or re-finance it a good investment. 

When releasing the best example is the financing of aircraft as an investment in some countries may otpisivati lessor in the books for 15 years and over. In this case, expensive and large aircraft are given to rent the first few years of the known world airline, and then lease them to take something economically weaker countries of the European Union, and then once the national airline of other European countries and in the end some of srednjeameričkih states. 

Finally, on the fifth level of leasing is treated as a service in which is included in each item that is for example a personal vehicle. Furthest to offer leasing went on anyway offer rich with American market. 

When talking about the lease, then, refers to a comprehensive service, a way of granting leases with a clear legal and tax system is very simple and accessible to everyone. In the American case, the lessee is able to use almost all the advantages of leasing as a form of financing to lease a full service.


Supporting Activities

As it has been leasing that have grown with him and supporting activities. There are primarily thinking of insurance, which began to specialize in all the risks associated with leasing facilities.

From the traditionally conservative insurance company, our insurance company turned into a flexible partner in the service recipient and provider of leasing. Today there are almost no insurance company that does not allow the transfer of bonus achieved with appropriate evidence, it offers installment repayment as soon as it was impossible and fully paid the damages that are ultimately in charge of controversial cases, recourse by the contractor. In addition to insurance and has developed a completely new industry - service charge and seizure of vehicles and equipment. As a rule, young age of leasing vehicles, a large number of companies that have developed their business right on this activity.

But only by a vote of the lease in December last year to create the necessary and indispensable conditions for decisively and correctly leasing operations of all 66 registered leasing companies in Croatia. Almost all leasing companies in the Croatian market entered through financing vehicles. With leasing there is little any of those who are not offering loans or conventional loans. Today, still mostly financed by leasing a vehicle, but a considerable number of contracts signed and the financing of other movable property, machinery, equipment, vessels, whole plant and of course real estate. Recently, an increasing number and needs for financing equipment. When it comes to IT equipment, it is usually about technology leasing.

As a rule, such funding does not exceed the time limit is longer than two years due to the relatively rapid obsolescence and loss of market value. In addition, technology leasing in this period, the option of full service. Therefore, any possible defect will be replaced at the expense of suppliers. Such services are efficiently respond to all demands of the market and competition. So everything that we can only yesterday seemed like a space mission today is leasing reality. There is almost no office where you do not have copiers, computer or device for water and coffee in the lease or the lease.