Classification of the lease on various grounds

Lease transfer operation economy when you select a species leasing come primarily from their classification features that characterize the attitude toward the leased property; type of financing leasing operations; type of leased property; composition of the leasing transaction; type of leased property; degree of payback of the leased property; market sector where leasing operations are conducted; relating to tax, customs and depreciation benefits and preferences; order of lease payments.

With respect to the leased property (or volume of service) lease is divided into:

- Net (net leasing), when all the costs of property maintenance assumes the lessee. In this case the lessee to the lessor transfers net or net payments. Due to the fact that Russia has not yet formed the leasing market, and virtually no leasing companies that could provide quality maintenance facilities lease, the most common type of leasing is clean. In a relationship “pure leasing” participating banks, insurance companies and other financial institutions engaged in the leasing business.

- Full, or, as it is called "wet" leasing (wet leasing) requires mandatory maintenance of equipment, repairs, insurance and other operations under the responsibility of the lessor. In addition to these services, at the request of the lessee, the lessor can take on the responsibility for training qualified personnel, marketing, supply of raw materials, etc. If the equipment maintenance, repairs, insurance, etc. are on the lessor, then say “lease, which includes additional commitments” (wet leasing). The subject of this form of leasing, as a rule, is a complex of specialized equipment. Wet leasing typically use either the manufacturers of this equipment or wholesale organization; financial institutions and banks rarely turn to this type of lease , as to them lack the necessary technical base .

- Partial (partial set of services), when the lessor assigned only a few functions to support the property.

By type of financing lease is divided into:

- Urgent when there is a one-time rental property.

- Renewable (revolver), in which after the first term of the lease agreement shall be extended for another period. While leasing facilities over time, depending on the wear and at the request of the lessee changed to more sophisticated designs.

Lessee shall assume all costs of replacement equipment. Number of leased assets and the terms of their use of renewable leases are not specified in advance by the parties. A variety of renewable lease is general lease that allows the lessee to supplement the list of leased equipment without new contracts. It is very important for companies with continuous production cycles and tight cooperation with contract partners. General leasing used when you need urgent delivery or replacement already received equipment leasing, and the time needed to study and conclusion of a new contract, as a rule, no. Under the agreement, the general mode of leasing in the event of unforeseen urgent need to obtain additional equipment lessor enough to send a request for the supply of the required equipment with reference to the agreed list or directory. At the end of the period for which an agreement, the lease payments are recalculated taking into account the time difference is the cost of the lessor and the new agreement.
Depending on the composition of participants (subjects) of the transaction, the following types of leases:

- Direct leasing, where the owner of the property (supplier) to losing yourself in the lease (two-way deal). In fact, this deal cannot be called classic leasing transaction, since it is not involved leasing company. A form of direct leasing is leaseback (sale and leaseback arrangement).

- Leaseback is a system of interrelated agreements, under which the company - owner of the land, buildings or equipment sells this property financial institution (bank, insurance company, investment fund, the company specifically focused on leasing operations) with simultaneous registration of the agreement on long-term lease his former property on lease. Leaseback acts in this case as an alternative mortgage transaction, the seller of property which the transaction becomes its tenant, immediately at its disposal from the buyer mutually agreed amount of the sales transaction and the buyer continues to participate in the operation, but as a lessor. Leaseback is needed, especially for those business entities, which urgently require substantial amounts of working capital. An important advantage of the use of the leaseback is already in operation of the equipment as a source of funding for construction of new facilities, with consequent ability to use the tax benefits granted to members of leasing operations. Leaseback enables refinance capital investments at a lower cost than in attracting bank loans, especially if the solvency of the company is placed loans of doubt due to unfavorable ratio between its registered capital and borrowed funds. When leaseback rents set as follows: The sum payments should be sufficient for full recovery of the entire amount of the investor, which was paid when buying them, plus the average rate of profit to provide for investment.

The transaction is executed in the following sequence:

1. Consists lease agreement between the lessor and the lessee;

2. Leasing company buys equipment from the tenant - the owner of the equipment;

3. Tenant regularly pays lease payments under the terms of the lease contract.

The benefits of such transaction to the original owner, lessee and later equipment are as follows:

- He can hire the services of a leasing company in the cases after the purchase of the equipment, when it became apparent that significant diversion of funds from the market for the purchase of this equipment led or may lead to the deterioration of its financial situation;

- It receives from the leasing company the full cost of the equipment returns spent on purchase of equipment facilities, while retaining the right to possession and use of the equipment;

- He can negotiate with the leasing company (which can sometimes take a long time) already having the necessary equipment and him using it.

In addition:

- Lease payments are deducted from the taxable profits of the company and accounted for as current operating expenses;

- The lessee is required to submit fewer than in obtaining a bank loan guarantee provision of additional transactions (stocks, bonds, bank guarantee or any other form of guarantees).

Thus, even those companies that at the time of the purchase of equipment for some reason did not want or could not simply not aware of the possibilities of leasing, are able to use all its advantages (including accelerated depreciation, relating to the cost of the lease payments, etc.) after the acquisition of equipment.

This scheme is often used leasing to obtain tax benefits provided for the finance lease.

Finally, the leaseback is often the most effective and relatively cheap way to improve the financial situation of the company. The magnitude of lease payments under this lease form depends mainly on the current value of the loan and the value of the leased equipment depreciation.

The difference between the purchase price and the price of the equipment to the lessor of its implementation is not usually paid to the tenant, and is accounted for in depreciation or proportionally distributed through lease payments. If the market price at the time the transaction is lower than the residual value is not amortized equipment, the difference is recorded on the lessee's balance sheet as a loss. An important advantage of the use of the leaseback is already in operation of the equipment as a source of funding for construction of new facilities.
Leaseback enables refinance capital investments with less than attracting bank loans, if the solvency of the company is placed loans of doubt due to unfavorable ratio between its statutory and borrowed funds. It should also be emphasized that the lease is a source of medium-and long-term refinancing, while commercial bank loans are usually for a period of 1.5 years with the necessity of their successive renewal.

- Indirect leasing (subleasing) when the transfer of property leasing occurs through an intermediary. Schematically it looks like. There is a major lessor, which, through an intermediary, as a rule, also leasing company leases equipment for rent to the lessee. In this case, the contract provides that in the case of temporary insolvency or bankruptcy of the intermediary lease payments should reach the main lessor. Such transactions are called “sub-lease.”
In the international sphere subleasing transaction, known as double dipping, use a combination of tax benefits in two or more countries. The effectiveness of such transactions due to the fact that the benefits of tax incentives, for example, in the UK more if the lessor has the right to property, and in the U.S. - if the lessor is entitled to possession.

- Separate leases (leases involving multiple parties) - leveraged leasing. This type of leasing is distributed as a form of financing complex, large-scale projects, such as aviation equipment, marine and river vessels, railway and rolling, drilling platforms, etc. These groups is also called the leasing or leasing joint stock companies with the participation of several suppliers, lessors and attraction of credit funds from a number of banks and insurance of the leased property and return the lease payments through insurance pools. This type of lease is the most difficult, as it is inherent in multi-channel financing. A specific feature of this type of leasing is that lessors provide only part of the amount that is needed to purchase the leased object. These funds are raised and accumulated by issuing shares and distribute them among lessors involved in financing transactions. The remainder of the contract value of the leased object is funded by creditors (banks, other investors). Characteristically, while lenders are not usually demand rights loans receivable directly from lessors. In these transactions owing to the many parties involved are present: Attorney creditors - to coordinate lenders and lessors attorney

- To manage joint actions counterparties. Lessor’s attorney acting as a nominee of the lessor and the owner receives title of the equipment. He distributes profits to shareholders.

- Leverage (credit, mutual separated) leasing or leasing with additional funding is the most difficult, as it is related to the multi-channel financing and is typically used to implement expensive projects.

A distinctive feature of this type of lease is that the lessor, buying equipment, pays from its funds not his entire amount, but only a part. The remaining amount he takes a loan from one or more lenders. At the same leasing company continues to enjoy all the tax benefits, which are calculated from the full value of the property.

Another feature of this type of lease is that the lessor takes a loan on certain conditions that are not typical for the domestic financial and credit relations. Loan is taken without the right to appeal a claim on the assets of the lessor. Therefore, as a rule, the lessor makes out in favor of the creditors lien on the property to repay the loan and gives them the right to receive a portion of the lease payments to repay the loan.

Thus, the main risk to the transaction are lenders - banks, insurance companies, investment funds or other financial institutions, and ensuring repayment of the loan are only lease payments and lease out the property. In the West, more than 85 % of all major leasing transactions are based on leveraged leases.

By type of property are distinguished:

- Leasing of movable property (equipment, machinery, vehicles, ships, aircraft, etc.), including new and second-hand.

- Leasing of real estate (buildings).

By the degree of payback leasing property is subdivided into:

- Leasing with full payback (or close to full) when during the term of the lease agreement there is a full or close to full amortization of property and, accordingly, the payment of value of the property to the lessor.

- Lease with incomplete payback in which during the term of a lease agreement is a partial amortization of property and pays only a part of it.
According to the features of repayment (amortization of property conditions) allocate financial and operational leasing.

- Financial (capital, straight) Leasing - financial, capital leases is an operation on a special property in the property acquisition and subsequent surrender his temporary possession and use for a period approaching the deadline for the duration of its operation and amortization of all or most of the property value. During the term of the agreement by the lessor of the lease payments is regaining the entire cost of the property and profits from financial transactions.
The main features that characterize the leases are as follows:

- The lessor acquires the property not for their own use, and especially for the transmission of a lease;

- Choosing the right property and it is owned by the seller;

- The seller of the property knows that the property is purchased specifically for putting it into leasing; property directly delivered to the user and takes over the operation;

- Claims for the quality of the property, its completeness, correction of defects during the warranty period the lessee shall send directly to the seller of the property;

- The risk of accidental loss and damage to property to the lessee after signing the acceptance - delivery of property into operation.

This type of lease is characterized by the following main features:

- Participation except lessor and the lessee of a third party (the manufacturer or supplier of the transaction object);

- Inability to breach of contract within the primary term of the lease, that is the period required to recover the costs of the lessor;

- Consecutive lease agreement (usually close to the lifetime of the object of the transaction).

After the completion of the lease agreement (contract) the lessee can buy the item at the residual transaction (rather than market) value; sign a new contract for a shorter period and at a reduced rate; back to the leasing company transaction. On his choice of the lessee must inform the lessor. If the contract provides for an agreement (option) for the purchase of the subject of the transaction, the parties would determine the residual value of the trade-in leases.

Operational (service) lease - service, operating leases used in the short term rental of equipment in which the duration of the product life cycle is much more of a contractual term of the lease. When operational leasing equipment is not fully depreciated during the lease, and can be re- leased or returned to the lessor. In practice, operational leasing transactions do not exceed the three-year period. Tenant in these transactions reserves the right to cancel the contract, provided notice of the lessor. This form of leasing provides greater responsibility for the safety of the tenant lease object. Tenant undertakes to independently enter into contracts with the firm - supplier for repair and maintenance of equipment.