What is commercial leasing
Commercial Vehicle Leasing Guide
Expert in law
Dr. Britta Beate Schön
Britta Beate Schön is responsible for all legal issues at Finanztip. The doctor of law and attorney was head of the legal department at financial service providers such as Telis Finanz AG and Interhyp. Before that, she taught and researched in Japan as a DAAD junior professor for German and European law. She completed her studies in Münster, Geneva, Regensburg and Leipzig. You can reach the author at [email protected]
For many self-employed people, leasing is still an attractive alternative to financing, because leasing has three decisive advantages over financing: a higher liquidity rate, balance sheet neutrality and tax advantages in the depreciation of costs.
In this article, the freelance editor Janina Meinhardt, as the author of Finanztip, describes the key features, advantages and noteworthy aspects of leasing from the point of view of commercial leasing customers with a focus on vehicle leasing.
The advantages of vehicle leasing (equipment leasing)
The advantages of equipment leasing result from the fact that, in the case of a leasing, the leased item must always be capitalized and thus also written off by the lessor (balance sheet neutrality and higher liquidity due to the continuity of the equity ratio) Financing framework not burdened) and the costs of the leasing can be deducted 100 percent from tax as operating expenses.
Financing the leased property by the lessor makes the leasing more expensive, in contrast to self-concluded financing, since in addition to the basic costs of the leased object, interest, administrative costs, financing expenses and profit are to be borne by the lessor, but the leasing is liquidity-neutral as the financing takes place via a third party who only rents the property.
In this way, the bank's own credit line and financing line do not decrease and, despite indirect financing, there is still the same amount of leeway as before the conclusion of a leasing - this makes sense if liquidity reserves are to be kept, for example for company expansion or if there is a high short-term Capital requirement.
Since the leasing object is activated by the lessor, the leasing good does not have to be written off by the lessee, which basically results in three advantages:
- Avoiding depreciation has the effect of reducing the balance sheet, since only the leasing rate up to the end of the leasing period has to be accounted for as an operating expense, but not the leasing object until the end of its useful life.
- By avoiding depreciation, the equity ratio does not deteriorate due to a depreciation object that decreases in value.
- When financing, only the repayment costs, for example the interest, can be written off from the tax and the acquisition costs can be written off linearly over the depreciation (deduction for wear and tear = depreciation), with a leasing the leasing rate can be written off 100 percent as operating expenses , even if this payment installment is basically composed of repayment, interest costs and apportioned costs of the leasing partner.
Since the amount of the leasing rate is also contractually agreed, there is a continuous outflow of liquidity, which can be expected - in the case of financing, this outflow of liquidity fluctuates due to the asynchronous repayment of the loan (falling interest portion, increasing repayment portion), the possible fluctuation in interest rates and depreciation of the financing object.
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Problems with vehicle leasing (vehicle leasing)
The most popular and still leading is leasing in the area of vehicles, both in the representative area (company car) and in the "Pay as you earn" segment (self-refinancing commercial vehicles), even if the share of leasing offers in the area of operating equipment or Financing of means of production is growing.
Vehicle leasing, however, has a number of pitfalls, especially since in Germany, in contrast to other jurisdictions, there is no independent leasing law, even if it is precisely regulated what constitutes leasing and what is financing or hire purchase is to be classified (and thus the advantages of leasing for an entrepreneur no longer apply).
Similar to the hidden profit distribution in tax law, leasing is not clearly defined, what is possible and what is not in a leasing contract is therefore not clearly regulated by laws and regulations, it is therefore a type of contract of its own - the problem for the lessee is that He could get three differently worded contracts from three different lessors for the same type of leasing (for example a leasing with a mileage limit).
This unclear situation repeatedly causes anger and new judgments, which in part provides clarity, especially in the area of kilometer leasing or residual value leasing, which is often offered in connection with vehicle leasing - because not everything that is contained in a sui generis contract, even if it is is not clearly regulated by law, also corresponds to what is possible, because when leasing a vehicle, lessors often try to transfer risks to the lessee as much as possible.
Mileage leasing and residual value leasing
In a leasing contract, for example, attempts are still made quite often to mix kilometer leasing with residual value leasing - however, the two forms of leasing are fundamentally different types of contract, because in the case of a kilometer leasing there is no transfer of the residual value risk to the lessee, but with the eponymous residual value leasing.
The Federal Court of Justice decided in its judgment of May 9, 2001 (Az. VIII ZR 208/00) that mixing is not permitted. This means: Either a kilometer lease with the residual value risk remaining with the lessor is agreed, or a lease with a contractually agreed residual value is offered in which the residual value risk is transferred to the lessee.
How high is the residual value (residual value risk)?
The residual value risk is always the greatest disadvantage of a leasing, as this is the decisive factor in whether a leasing is ultimately expensive or not - because, in contrast to all other factors of a leasing, for example in the form of administrative costs or the rate, the residual value risk is hardly calculable . Although the depreciation value and thus the residual tax value of a vehicle can be determined without any problems, the residual value in the case of a leasing refers to the market value at the end of the leasing.
This market value is only partially calculable, for example on the basis of kilometers driven or assumed wear and tear, but the theoretically determinable market value does not have to correspond to the actual market value - if there is a decline in demand for the leased object at the end of the leasing period, the achievable residual value will decrease regardless from the theoretical value, nevertheless rapidly.
If a vehicle leasing is agreed with a residual value leasing, this can mean that at the end of the leasing term there may be an additional final installment, which is supposed to balance the contractually agreed residual value and the actual value (market value). In the case of a kilometer lease, however, the contract does not provide for residual value compensation, i.e. the residual value calculated by the lessor represents his entrepreneurial risk - however, kilometer leasing is often more expensive for this reason.
Because: A residual value leasing can be calculated with initially very favorable conditions through the transfer of risk, see above - in this case the agreed residual value is often set too high in order to reduce the monthly installments and to make the leasing even more attractive. For the lessee, this not only creates the risk of the “guaranteed” final installment, but above all that of the additional outflow of liquidity in the form of the compensation payment, which represents an incalculable outflow of liquidity.
Since the residual value of a vehicle in a kilometer lease is based on the underlying wear and tear and the number of kilometers driven, this is the lessor's imputed risk - in other words: did he or she correctly estimate the achievable market value based on kilometers driven? Since the financial residual value risk cannot be transferred to the lessee, the calculated residual value is often lower in a direct comparison of residual value leasing and kilometer leasing.
Put option as a further leasing risk (put option)
Another possibility to make the vehicle leasing disadvantageous for the lessee is the so-called put option - behind this there is nothing more than a unilateral obligation to buy, which is also intended to pass the residual value risk on to the lessee. The put option or the put right means that the lessor can decide and determine to whom he will sell the leased object after the end of the lease, whereby there are two possible scenarios: he designates the lessee as the buyer or he designates a third party as the buyer.
The right to tender is disadvantageous, as the lessee can be disadvantaged if the residual value is not reached or if the residual value is exceeded: If the residual value is not reached, the lessor can sell the difference to a third party at a lower price as well as a Demand residual value leasing from the lessee - he can, however, also offer the leased object to the lessee so that the lessee has to buy it at the contractually agreed residual value, even if the value is lower.
However, this also applies if the residual value has been exceeded - on the one hand, the lessor has the option of selling the property to a third party and retaining the added value as a profit, which is without direct disadvantage for the lessee, but he can also the lessee force you to buy above the agreed value due to a higher actual residual value.
More on this in the legal protection insurance guide
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