ABC leasingu

Leasing vs bank loan

For those Clients who are contemplating what would be the most advantageous manner of financing for them we have prepared a table that should help them take the decision.

 

Comparison of various forms of financing:

  Cash Loan Operating (Tax) Lease Full Service Leasing (FSL)
 
Used mostly by individuals individuals companies companies
Party disclosing in the balance sheet Client Client Client Financing Party (for the Client it is an
off-balance sheet transaction)
Influence on current assets own funds are frozen increases liquidity of the company’s
current assets		 increases liquidity of the company’s
current assets		 increases liquidity of the company’s
current assets
Vehicle utilization costs unspecified in the longer term unspecified in the longer term allows to prepare a precise and stable
balance for 3-4 years		 allows to prepare a precise and stable
balance for 3-4 years
Ownership title to the vehicles lies with Client Client Financing Party Financing Party
Party making depreciation write-offs Client Client Financing Party Financing Party
Financing allocation procedures not applicable
  • Complicated and time-consuming
  • Restrictive requirements concerning creditworthiness and rigid terms and conditions
  • Simplified
  • More flexibility than in the case of a loan as regards adaptation to the situation and individual needs of the Client
  • Simple collaterals (bill of exchange + ownership title to the vehicle)
  • Simplified
  • More flexibility than in the case of a loan as regards adaptation to the situation and individual needs of the Client
  • Simple collaterals (bill of exchange + ownership title to the vehicle)
    
Repayment schedule not applicable

Repayment schedule is rarely adjusted to the actual depreciation of the vehicle.

Loan repayment instalments are usually distributed over
a shorter period of time than the anticipated
useful life of the vehicle.

 Lease installments may be distributed over
a period of time equivalent to the vehicle’s
useful life.		 Lease installments may be distributed over
a period of time equivalent to the vehicle’s
useful life.
Deductible costs depreciation depreciation + interest

entire lease installment (principal + interest)
deferred tax liabilities (the so-called tax shield)

entire lease installment (principal + interest)
deferred tax liabilities (the so-called tax shield)
VAT Paid in advance in full by the Client Paid in advance in full by the Client Paid by the Financing Party; lease installments are calculated on the basis of the vehicle’s net value. Paid by the Financing Party; lease installments are calculated on the basis of the vehicle’s net value.
Additional services None.
All activities related to the vehicle are performed by the Client		 None.
All activities related to the vehicle
are performed by the Client.

The Financing Party is responsible among others for:

  • vehicle registration and carrying out other administrative activities related to the vehicle (e.g. registration car exchange)
  • taking out insurances

In the case of FSL the Financing Party is responsible among others for:

  • service,
  • exchanging tyres,
  • vehicle registration and carrying out other administrative activities related to the vehicle (e.g. registration car exchange),
  • taking out insurances,
  • providing spare parts.
Alterations to the vehicle and amendments to the agreement The vehicle may be freely altered. It is possible to make some alterations to the vehicle.
  • Alterations to the vehicle may be made solely upon the consent of the Financing Party.
  • Little flexibility as regards terms and conditions of the agreement during its term.
  • Alterations to the vehicle may be made solely upon the consent of the Financing Party.
  • Little flexibility as regards terms and conditions of the agreement during its term.