Leasing is a financial leasing contract with which the leasing company (grantor) makes available to its customer (user) a movable or immovable property, instrumental to its profession, an entrepreneurial activity, upon payment of a periodic fee.

Although there are different types of leasing contracts, each has some common characteristics at the base: such as the consistency of the first rent and the possibility of purchasing the asset upon expiry of the contract signed. In general, the first fee that is paid (also called "maxi fee" for this reason) is of a greater magnitude than the subsequent ones (if the formula of leasing with constant rent is excluded), this is because it is aimed at reducing the risk of loss, as compensation, for the grantor in the event of insolvency. Once the contract has expired, the lender has the right to purchase the asset itself, subject to the exercise of the purchase option (redemption) through the payment of a price (redemption price). Four types of leasing: financial leasing, operating leasing, lease back and equity leasing.

 

The types of leasing:

 

financial leasing It is one of the most traditional and complete leasing versions and is, most probably, the most used. It is called "financial", because in this case the service is very close to a finalized financing having as its object highly specialized goods. Upon expiry of the contract entered into with the leasing company, the subscriber can decide whether to redeem the asset or return it to the company. In this case, obviously, the duration of the contract is closely linked to the nature of the leased asset and its productive life (generally ranging from 3 to 5 years for movable assets and from 25 to 30 for real estate) .

 

Operating leasing is the first leasing contract to appear on the market. This formula essentially concerns high standardization goods, such as computers, copiers, for example. Unlike what happens in the case of financial leasing, operating leasing is a bilateral relationship entered into with the company producing the asset. In this case, therefore, the manufacturer and the lessor coincide, therefore, in principle, it can be said that: the redemption price is not always convenient as in the case of financial leasing (given the high standardization and spendability of the product on the market) ; the duration of the contract is significantly less than the financial lease.

 

The sale and lease back It is also called "return leasing". The sale and lease back has two contractual arts, as in the case of operating leasing, but this time it is not the manufacturer and the lessor that coincide, but the supplier and the user. Often, this formula is exploited by entrepreneurs, who sell the asset to the leasing company and therefore rent the use in a second moment. This can be convenient for two reasons: a liquidity crisis due to financial difficulties; the will to demobilize capital in favor of investments without depriving oneself of the instrumental good. At the conclusion of the contract you can in any case take advantage of the redemption.

 

For information purposes, we also consider a particular leasing formula, which affects consumers less closely: equity leasing. This contract allows the leasing company to acquire a shareholding in a company that will be leased to the entrepreneur. At maturity, you can decide whether to redeem the share package or not. The disposal of equity investments is also in this case a useful reinvestment tool in new businesses.

 

How does leasing work?

 

The leasing contract is structured around three subjects: the grantor company, the customer (user of the asset) and the supplier. In this relationship, the leasing company is configured as a mere lender and, therefore, does not assume responsibility for the identification of the asset and its use. Leasing assumes that the granting company purchases the requested asset and leases it to the user, who therefore - for the entire duration of the contract - does not own the property, but only the availability and the right to use it. All assets - movable, immovable or transport - instrumental to the client's business can be leased. For the entire duration of the contract, in order to use the asset, the customer must pay a fee - determined during a negotiation phase - to the leasing company. This fee, which can be monthly, bimonthly or quarterly, has some particular characteristics: it is tax deductible. It is this feature that makes leasing particularly interesting compared to other financing transactions, especially for those who generate profits of a significant amount. It is the consideration for a service (financial lease) and therefore expresses in addition to the cost of the transaction in terms of the rate applied, also all services identified as "added value" by the leasing company. In the light of this definition, it seems inappropriate to judge the value of an operation only in terms of the amount of the fees, regardless of its contractual characteristics, as well as the operational efficiency of the granting Company. The initial fee (so-called "advance") is ordinarily expressed as a percentage. The advance can also be pariai successive canons. In this case, we speak of "Leasing to canonists". Pros and cons of leasing If you are about to opt for a leasing, or you are undecided whether to buy or rent an asset that is instrumental to your business, you should bear in mind all the advantages and possible disadvantages that this contractual form provides. The pros of the leasing transaction include: accessibility flexibility, given by contractual conditions that can be modulated on customer needs, coverage from the risk of obsolescence, speed and simplicity with respect to the purchase. The cons, on the other hand, include: the cost of the asset, subject to VAT (also in the case of real estate) the fact that the asset remains the property of the leasing company until redemption and therefore does not appear in the balance sheet among the fixed assets with the exception of the companies that compile the IFRS financial statements according to which criteria the asset must be included among fixed assets and residual debt on liabilities.

The fact that the leasing companies in turn request loans from banks for the lessor is also of the utmost importance to assess the asset's risk risk, considering the fairness of the price of the asset in relation to its characteristics of use and profit. production, its recoverability, its relocation to the market, its value in the event of early return due to user insolvency and its compliance with accident prevention regulations.

Did you know that ... The rent is fully deductible, provided that the asset is instrumental to the business activity and that the duration of the contract is not less than half the ordinary amortization period fiscally provided for by the ministerial tables. In the case of real estate, the duration cannot be less than 8 years. In the event of redemption, the asset will be returned to the company's assets (tangible fixed assets) and the ordinary depreciation rates set for the used goods.