Lease transactions
Lease services (financial lease) of Novikombank are rendered through its partner – VSP-LEASING. Customers are provided with the lease of industrial and processing equipment, special equipment and vehicles by way of concluding:
- financial lease agreements;
- leaseback agreements.
As compared with other methods of property acquisition (direct purchase, bank credit, purchase with delayed payment) the lease is the most effective way of purchasing any equipment/machines, which have these essential advantages:
- According to Article 28 of the Federal Law ‘On financial lease’ all payments effected under lease agreement are recorded as costs (manufacturing expenditures) of the lessee, thereby they reduce the taxable base of income tax.
- In conformity with Article 259 of the Tax Code, the application of accelerated depreciation index in the lease enables a threefold reduction in expenses for the property tax, and reduces the payback period.
- Depreciation of equipment using an accelerated depreciation index allows allocation of its cost to the cost of goods or services more quickly.
- According to Chapter 21 of the Tax Code, VAT is excluded from lease payments. This allows the lessee to offset VAT against the overall amount of the lease agreement, rather than against equipment cost only.
- In accounting records lease payments are not treated as a debt, but are specified in the balance sheet as current expenditures, which improves the balance sheet structure and enhances the credit status of the lessee.
- At the conclusion of lease agreement the requirements of security are less strict than in the case of a loan, as during the lease term the equipment itself is the primary security.
- The lease term is much longer than the term of an accessible loan. As a rule, the term of a bank loan is no more than 1 year, while a lease term may be up to 4 years.
- Using a lease agreement an entity may effect payments from the funds received from the sale of products developed on the new equipment as lease payments shall be made after equipment installation, adjustment and commissioning.
- Using a lease agreement an entity may have a wide range of transportation services, customs clearance, installation, adjustment, state registration and equipment insurance, as well as consulting services during negotiations with suppliers.
- Using a lease agreement an entity will save up to 20% of funds as compared to expenses for the acquisition and equipment maintenance in the case of a direct purchase or a purchase on credit.
In addition, a lease is an effective tool of a company’s positive image and credit history creation in the financial market.
