As it is more advantageous to acquire basic means: car leasing or credit?

Table of Contents article:

• The main ways to buy a car on credit and leasing:
• way of 1: purchase of cars at their own expense
• way of 2: purchasing a car loan
• option 3: purchase cars on lease
• Comparison Table cars on credit and leasing
• Summary and Conclusions

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When it comes to the need for the acquisition of fixed assets, many businesses are beginning to think about the fact, which way is more advantageous to make a purchase. Such methods are:

• purchase on credit;
• in leasing;
• of personal funds.

to understand, which of these methods is more advantageous, It is a concrete example to make out all the "pros" and "cons" of each method.

so, Take the example of the company "A", whose profit last year was 3100 000 rubles. The company's management decided to purchase business class car, market value of 3100 000 rubles. Since their own funds is not recommended to make full use for the purchase of fixed assets, the decision was taken considering financing the acquisition through credit or leasing assets.

The main ways to buy a car on credit and leasing:

way of 1: purchase of cars at their own expense

Buying a car at their own expense assumes a one-time introduction of the entire value of the vehicle. This circumstance is unfavorable for the successful conduct of business, as the cost of the car is equal to the annual profits of the enterprise. Besides, after the acquisition of the vehicle must be put to the accounting as the primary means, for which reason the carrying value subject to tax on real estate (2,2%) and be not less than 302 000 rubles.

However, in this method, there are advantages acquisition, consisting of:

• The decrease in the tax base for VAT, since the acquisition cost of cars 3100 000 the amount of VAT to be reimbursed 473 000 rubles.
• Savings income tax deductions due to vehicle depreciation, as well as machinery depreciation period is equal to 84 of the month, then during that time savings on income tax will be not less than 377 000 rubles.

way of 2: purchasing a car loan

In view of the identified conditions of the loan amount to buy a car will be 2480 000 rubles. Take into consideration the loan term - 36 months under 12% per annum. Additionally paid a commission for granting the loan - 1%. As part of the repayment of the loan agreement will occur annuities.

Outs of the application of this method is the need to make an initial payment or the provision of collateral. Besides, We need to be alert to the, that the assessment of the value of the collateral will be made with a reduction in the size of the discount, in practice constitutes 35-40% the value of collateral.

The advantages of buying a car on credit is:

1. The decrease in the tax base for the amount of VAT 473 000 rubles.
2. The amount of property tax will not exceed 302 000 rubles.
3. Cost savings due to reduction of income tax for the entire period of loan amount 377 000 rubles.

Within the framework of the application of this method in the process of buying a car loan, It requires the involvement of its own funds in the amount of not more than 20% of the total amount. The remaining part of the profits can be used for other purposes. For example, it can be put in a deposit account under the 8% for 3 of the year. In this case, income from the invested money will be 595 000 rubles.

option 3: purchase cars on lease

In the present embodiment, acquisition of the car in lease, addressed the same conditions, that in other methods:

• the sum of the acquisition of car – 3100 000 rub.;
• leasing amount - 2480 000 rub.;
• lease term - 36 months;
• rate under the lease payment - 16,5%;
• Annuities - repayment schedule;
• amortization period of car - 36 months.

Advantages of the acquisition of car leasing:

1. As part of the acquisition of the car leasing method it is possible to reduce the VAT taxable base on 614 000 rubles due to the inclusion of lease payments for VAT refund.
2. The inclusion of the property tax in respect of the lease payment.
3. When buying a car leasing it is possible to apply accelerated depreciation system, and the size of the lease payments reduce taxable income tax. The result is a savings of Finance, that for the entire period of the lease agreement will be 666 000 rub.
4. The possibility of using unused finances as a deposit, the income from which will be 595 000 rub. for the entire period of the lease agreement.

Comparison Table cars on credit and leasing

The table is comparable to the circumstances of the above-described acquisition of the vehicle in each of the methods and find out how convenient to choose a car loan or lease.

Summary and Conclusions

After analyzing the information,, mapped in Table, we can conclude, that the lowest overpayment when taking a loan or car leasing, It takes place within the framework of the acquisition vehicle for the company's own funds. However, this requires positioning of free cash in 100% amount of the cost of the machine. From this point of view, credit and leasing are more profitable ways to buy, so that only a partial funding of the acquisition. Besides, released from the acquisition of the funds can be directed to increase profits by placing on the deposit. As can be seen from the table, in terms of overpayments (taking into account the optimization of taxation) is more advantageous way to lease a car purchase on credit.