A leasing loan is a type of loan that is not regulated by law and its functioning is based on the principle of freedom of contract and the Civil Code. It is a leasing company and only she (and not the bank) can grant this type of loan. Therefore, these companies also set the criteria according to which they provide it, and the entrepreneur can quickly receive the funds he needs with minimum formalities.
The leasing loan is granted for the purchase of a fixed asset needed for conducting business activity, ie for the purchase of machinery and equipment as well as passenger cars and vans, as well as heavy transport.
It is worth noting that customers who have received EU funding may also apply for a leasing loan.
When to consider a leasing loan?
A leasing loan is particularly beneficial for:
- representatives of companies that apply for EU subsidies
- companies that do not pay VAT
- companies that are seeking financing for a fixed asset taxed at 8% VAT
For all of them, a leasing loan is both a safe and the most advantageous option. It can also be applied by those who have been refused funding by the bank. Our ability to take a leasing loan is affected by the lack of entries in the debtors database and a positive rating in BIK.
When deciding on a leasing loan, remember that we can include it in the cost of doing business, ie it must be subject to value added tax. What’s more, it is also worth considering when we want to buy a used vehicle from an individual seller, because it is a more advantageous option for us than leasing.
What can you finance?
Taking a leasing loan, we can finance, among others purchase:
- vans and passenger cars
- agricultural machinery
- medical equipment
- devices and machines, among others IT
- real estate and to obtain funds for construction, eg a hall.
Companies dealing with leasing loans willingly grant them primarily to those who want to buy machines and devices from known producers and from reliable sources.
This loan is becoming an increasingly popular source of financing for fixed assets, and so in 2018 the value of leasing loans granted was $ 7.4 billion and increases every year 1.
Lease loan collateral
The leasing loan may be secured by:
- promissory note with a promissory note declaration
- registered pledge on the financed fixed asset
- assignment from insurance to a leasing company
- and with subsidy loans also an assignment from subsidies.
Advantages and disadvantages
A leasing loan has a lot of advantages because it combines the best features of operational leasing and credit, so:
- we can use it without own contribution (however, it depends on the amount of financing)
- there is no minimum duration for this loan
- has a long financing period (from 6 months to even 8 years)
- has formalities simplified and reduced to a minimum
- we can apply for high amounts
- the decision to withdraw money is taken very quickly
- VAT is not added to the loan installments, ie our installments are lower,
- from a financial and tax point of view, it is treated as a loan, ie the equipment purchased thanks to it immediately becomes our property
- enables financing of EU subsidized projects
- we can take it in another currency, eg dollar
- allows you to change the repayment schedule, which means you can decide whether you want them to be equal, decreasing or seasonal.
The disadvantages include:
- The leasing loan is granted only for fixed assets and not for any purpose or to finance current expenses and investments
- we will have a problem to get it for unusual or innovative machines that are new in their field
- this loan reduces our credit standing
- is visible in the Credit Information Bureau (BIK)
- it is not possible to exchange a fixed asset for a new one after the end of the contract, as for leasing
- companies that pay VAT do not have tax benefits
- we cannot include the entire installment in operating costs (we can only count interest)
- you also have to reckon with the additional costs associated with establishing the security.
Leasing loan and operational leasing
Operating lease is a type of short-term contract in which the lessee does not own the item and is not required to depreciate.
In turn, the leasing loan is used only to finance fixed assets and we immediately become their owner.
The installment of the leasing loan is exempt from VAT, ie it is beneficial from a tax point of view and it is a very good solution for entities that are not VAT payers. In turn, operating leasing is treated as a service, where the tax on goods and services is added to the installment.
Another difference is also the duration of the operational leasing contract, which is 2-3 years, and in the case of a leasing loan from 6 months to even 8 years.
From the entrepreneur’s point of view, who wants to optimize their costs, operational leasing will be a better solution, because leasing installments and initial payment are tax deductible. Moreover, the lessee can deduct VAT from leasing installments, which is 23%.
In turn, a leasing loan is the best option for those who are not VAT payers or for those who want to benefit from EU funds. With a loan, the customer immediately becomes the owner of the purchased item.
The leasing loan also has zero own contribution and flexible repayment schedule.
Leasing loan versus VAT and PIT
A leasing loan is granted for the purchase of a fixed asset, which we become the owner of. Due to this property, we have the right to recognize depreciation charges in our costs.
It should also be noted that this option is more favorable than classic operating leasing, in which the lessor is the owner of the fixed asset throughout the entire leasing period. What’s more, we can also include interest on the lease loan in the tax deductible costs.
Another advantage of a leasing loan is that you can benefit from an exemption from VAT.
What is cheaper – leasing or loan?
Comparing all the parameters, it can be concluded that a leasing loan is cheaper than leasing. First of all, this is due to VAT, which in the case of loans is not charged on interest as opposed to leasing.
Another factor that speaks in favor of the loan is that we do not need to have an own contribution in its case, which reduces our costs. A leasing loan is also a better choice for customers who settle in the form of a tax card, ie they are not VAT payers.
On the other hand, in the case of financial leasing, the costs of legal pledge are eliminated.