Leasing for a car - is it worth it and why?

Car leasing is one of the most frequently chosen ways of financing a car. This is due to several factors that encourage business owners to use such a solution as auto leasing. See what are the advantages of this financing option!

First of all - auto leasing is easy to obtain

Auto leasing is an attractive financial product for companies. One of the reasons for its popularity is that it is easier to obtain a positive leasing decision than in the case of car loans. The leasing procedure is shorter and simpler, and there is no need to enter into an agreement:

• sureties,
• bills of exchange,
• other additional safeguards to protect the lessor from any default by the lessee (known as the lessee).

Second, simple repayment security

For the lessor (also called the financier), a sufficient security is the fact that he is the owner of the car. In the car registration certificate, the leasing company will be the owner of the car for the entire term of the contract, i.e. until the lessee has actually repaid the entire debt. What is more, financiers are more willing to lease cars to companies, because on the Polish market cars are considered to be quickly transferable goods, so the risk of possible non-payment of lease installments by the lessee does not pose a greater threat to leasing companies.

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Thirdly - tax benefits in auto leasing

Another aspect inducing entrepreneurs to use auto leasing when financing a company vehicle is undoubtedly tax benefits. For persons running a business activity, car leasing is an opportunity to reduce taxes due, both income tax and VAT paid. Auto operating lease gives the possibility to include the entire lease installment, i.e. its capital part and interest part, in the tax deductible costs. Tax depreciation, as the owner of the vehicle, may be carried out by the financing party.

Fourthly, there is no impact on the creditworthiness of the company

Cars rented by a company under an operating lease are not included in the company's fixed assets, as they are the real property of the leasing company. Thus, a car leased does not burden the company's balance sheet and does not reduce its creditworthiness. Thanks to this, if a company starts applying for a loan, for example, it will be better evaluated by the bank and it will be easier to obtain an appropriate amount for investments or development.

How can you terminate a lease agreement?

A car lease can be terminated in several different ways, but most often two are used. One is to return the vehicle to the leasing institution at the end of the contract. The second solution, which companies reach for more often, is to repay the remaining value of the car and take it over into ownership.