Types of leases

For legal entities up to three types of leasing contracts are available + factoring:

Operating lease

The most popular vehicle leasing option among business customers. In the case of a classic operating lease, the vehicle is used for an agreed period, at the end of which it is returned and, as a rule, the next vehicle is leased.

Essentially, the business customer has the following options at the end of the leasing period:

1. return the vehicle to the car dealer;
2. conclude a capital lease agreement corresponding to the residual value, continue leasing as finance lease;
3. buy the vehicle out with the residual value;

Operating lease contract for machinery and equipment must be agreed separately depending of the asset.

Finance lease

Suitable for those business customers who want to acquire a vehicle or an asset. At the end of the leasing period, the ownership of the asset is transferred from the leasing company to the lessee without additional payments, if the payments have been calculated as an annuity (i.e. one-size-fits-all payments).

A residual value finance lease is different from a standard finance lease. In this case, a higher payment is left at the end of the lease period. This is suitable for business customers who want to pay lower payments in the main period, but pay a higher payment for the residual value at the end of the lease period.

Full service leasing

This is an operating or finance lease where, in addition to the lease payments, additional services ordered are also paid monthly. Depending on the leasing company, the service package may include insurance, maintenance, fuel card, car assistance, replacement car, etc.

These contracts for machinery and equipment must be agreed seaprately depending of the asset.

​Factoring

This is a financial transaction in which a company sells its outstanding invoices to a financial institution. The financial institution pays the agreed amount to the company's account immediately after completing all the documents. Factoring helps to improve the company's liquidity and increase sales, thus obtaining additional working capital.

Non-recourse factoring: is the sale of sales invoices to a financial institution with the transfer of ownership of the receivable. In the case of non-recourse factoring, the receivables from the buyer are the collateral for the financing.

Recourse factoring: the right to sell the receivable from the buyer to the seller arising from the invoice back to the financial institution on the day of recourse, secured by agreement of the parties to the contract. Recourse is triggered if the buyer fails to pay the money into the account of the financial institution by the due date, i.e. the seller is obliged to repurchase the claim. This factoring is secured by a claim against the buyer and a right of recourse against the seller.


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