In various leasing companies, the procedure for concluding a contract is practically the same—only the duration of certain stages may differ.
- The client analyzes the leasing services of various firms and selects the company whose terms seem most attractive. He provides the chosen firm with the necessary documents—for individuals, these include: a copy of their passport, proof of income, and information about owned property.
- The leasing company analyzes the documents. The security department verifies both the client and the equipment supplier chosen by the lessee.
- If the purchase of equipment is financed by a bank, the documents are forwarded there for review and approval.
Drawing up a leasing agreement
Once a positive decision is made, the leasing company prepares the paperwork: the lease agreement and the purchase and sale agreement for the leased asset. The former is signed by the client and the leasing company, while the latter is signed by the leasing company and the equipment seller (sometimes the lessee's signature is also required). The document, among other things, specifies the timeframe within which the client must pay the down payment. After this, the company pays the supplier for the equipment, and the asset is handed over to the client for lease. Leasing agreements stipulate that the asset must be insured by this point. The lease agreement includes a payment schedule, according to which the client must pay the rent and the cost of the equipment.
Early buyout and early repayment of a lease agreement
Lease terms allow for the early buyout of the asset after 6–13 months—these timeframes may vary slightly between different companies. The client's payments in this case also differ. They may include:
- Debt balance;
- Leasing company expenses (e.g. taxes, etc.),
- Leasing interest,
- Penalty.
Some companies providing leasing services allow their clients to repay the debt early without any penalty fees.
A leasing agreement allows for early termination if the equipment is stolen or fails. In such a case, the leasing company receives the insurance payout and settles the client's debt. Any remaining insurance balance is credited to the client, but if the payout is insufficient to cover the debt, the lessee will have to pay the remaining amount themselves. The leasing company may, on its own initiative, terminate the contract if the client does not comply with its terms (fails to make payments according to the schedule, violates the operating conditions of the leased equipment, etc.). In this case, the leased asset is seized and sold to settle the client's debt.