Financial leasing is a form of financing with a purchase option or returning the leasing object upon expiration of the financial leasing contract. When the contract stipulates purchase of the leasing object the lessee becomes the owner of the leasing object when the last leasing installment is paid.
Relevant characteristics of financial leasing are:
- Financing is approved for a specific leasing object
- Procurement of the leasing object is performed by the leaser and lessee selects the leasing object
- Leaser is the owner of the leasing object until expiration of leasing contract
The leasing object is shown as long term property of the lessee (economic owner). Lessee realizes the right to depreciation costs and costs of calculated interest. Leaser is the legal owner of the leasing object.
Lessee is indebted on the long term for the total amount of leasing (principal and interest).
Period of financing is adapted to needs of the lessee, but it cannot be shorter than 24 months.
Down payment lessens the amount of leasing and leasing installment rate and is not returned upon expiration of the leasing contract.
The leasing object must be all-risk insured by the lessee during the period of the leasing contract.
Upon full payment of all obligations under the leasing contract the right of ownership over the leasing object is transferred to the lessee.
All risks and benefits in the period of exploitation of the leasing object are transferred to the lessee.