In this article we will look at how the early redemption of a leased asset takes place. Let's find out what clauses of the contract should be paid special attention to and whether it is possible to buy a car or real estate ahead of schedule. We will tell you about the procedure for the lessee and figure out where to get a sample buyout letter.

If in relation to loan agreements early repayment is quite commonplace, and the bank will be obliged to recalculate, then in relation to leasing everything is not so clear. Quite often, clients have a question about whether it is possible to pay off the lease of a car or other property early. In fact, such a possibility exists.

Let's look at the reasons why a lessee decides to buy out real estate or another leased item early:

• The emergence of free funds and the desire to reduce overpayments. But the leasing agreement does not always allow for the recalculation of interest without additional approval.
• The need to urgently transfer property into the ownership of the company. For example, such a need sometimes arises during the sale of companies or transactions related to mergers and acquisitions.
• Significant change in the conditions of use of the property. Typically, a leasing agreement contains clear instructions regarding restrictions on the use of the received machinery, equipment or real estate. If, for example, the property needs to be leased to a third party, then it is worth coordinating such actions with the lessor or purchasing the leased object.

The lessor can also initiate an early repurchase; for example, this possibility is often provided in case of significant deterioration financial condition lessee.

Early purchase of property at the initiative of the lessee

Typically, the initiator of the early purchase of property is the lessee. His desire alone is enough to carry out this operation. It should be taken into account that the law limits the minimum leasing period to 12 months. If less time has passed from the conclusion of the contract to the complete redemption of the property, then you will have to take this moment into account when calculating taxes.

Most leasing agreements provide for the payment of all interest initially stipulated for the early purchase of property. This means that you will not receive any savings from early redemption.

You need to study the contract very carefully or try to agree on individual terms with the lessor.

For a leasing company, early termination of a leasing agreement is unprofitable. She purchased property for a specific client, and transferring it to other lessees would be very difficult, and the sale of some equipment or real estate would require significant time investment. But sometimes the lessor has no choice but to terminate the contract unilaterally.

Such decisions are made if the client has delayed payment for more than 2 months, regularly delays payment, or violates insurance rules. Often in this case, the company first offers the lessee to pay the debt in full and buy the property at the current residual value. If the offer is rejected and the debts are not repaid, the lessor simply seizes the property. At the same time, he does not need a court decision, because the leased object is his property.

Sometimes companies provide in the contract the possibility early termination at the initiative of the lessor and in other situations, for example, in case of a sharp deterioration financial situation lessee. But usually such clauses are found only in contracts for fairly large transactions.

Important! The mere desire of the lessor to terminate the contract is still not enough. He must have the appropriate grounds specified in the agreement between the parties.

How to find out the redemption value of a property

One of the most difficult issues is calculating the redemption value of the leased asset in case of early repayment. Its size will significantly depend on the terms of the original agreement. Typically, the client is asked to make all remaining payments under the contract and then receive ownership of the property.

Even if the agreement provides for the recalculation of interest, the lessee is obliged to cover the lessor's expenses and pay him certain compensation.

Calculating the redemption value of a property on your own is not always easy. Some companies prepare a separate application with the schedule and conditions for early repurchase. If not, you will have to make a written settlement request indicating the date of full repayment. In the response letter, the leasing company must indicate the exact amount for the early purchase of the property.

How to buy out a leased asset early

Although the procedure for early redemption of leased property often raises many questions among lessees, it is quite well developed and regulated in leasing companies. Managers do not refuse to help with such a procedure, and big problems clients do not experience this.

Let's take a step-by-step look at how early redemption of leased property occurs:

1. The client sends a request to calculate the amount of early repayment and informs the company about his desire and the planned date of payment. A sample letter for early repayment of leasing can be requested through the manager or found on the Internet.
2. Company employees make calculations and also form an additional agreement to the leasing agreement. All mandatory conditions for early redemption must be recorded on paper so that there are no disputes between the parties in the future.
3. The client makes a payment to the leasing company's account. It is very important to carry it out before the date agreed upon by the parties.
4. The transfer of property to the lessee is formalized. All conditions and terms for the transfer of property rights must also be contained in the additional agreement or initial contract.

Nuances of early repayment of leasing

Leasing companies are interested in obtaining the maximum benefit from each transaction. It is for this reason that even at the stage of drawing up the initial contract, they try to include in it various conditions that make it difficult to buy the car ahead of schedule, make such an operation unprofitable, or can compensate for lost profits.

You need to carefully study all documents related to the transaction before signing them.

Let's consider what nuances a client may encounter:

• Moratorium on early repayment. Many companies prohibit the early purchase of property before the expiration of 12 months from the date of the transaction. This allows the lessor to make a profit, and also eliminates situations where the tax authorities recognize the transaction as imaginary and charge the appropriate amounts of taxes.
• Additional costs for early redemption. If a leasing company agrees to recalculate interest upon early repayment of leasing, this does not mean that it is ready to give up part of its profit. The client will have to pay the lessor a certain commission, which will include the company’s expenses (for example, taxes).
• Increase in redemption value. Some leasing companies go further and, when purchasing leased property early, try to get the maximum from clients. Any deviations from the terms of the contract lead to an increase in the redemption price. For example, a scratch on a car that has not been reported to the insurance company may already result in fines.

Source: https://bank-biznes.ru/lizing/dosrochnyj-vykup-predmeta-lizinga.html

Early repayment of leasing in 2018 - recalculation, sample letter

When concluding an agreement between the lessor and the client, all conditions are agreed upon, including early repayment. If a citizen decides to close the transaction ahead of schedule without notifying the company in advance, this will result in certain financial costs for him.

Peculiarities

Russian legislation does not contain any restrictions for the client of a leasing company in early repayment and redemption of property. The lessor has no right to limit the client in this. However, when drawing up a contract, certain conditions are stipulated.

Often, early purchase can be made no earlier than 9 months from the start of the lease, and sometimes – 12 months. Upon termination of the contract in ahead of schedule the client is obliged to pay interest.

During the conclusion of the contract, most leasing organizations draw up a repurchase schedule. It specifies the possible timing and amount of overpayment.

Features of considering an application for early repayment of a lease:

1. The application is considered not only by the company’s management, but also by the owners of the vehicle, as well as the founders.
2. The decision can only be made collectively.
3. The client's request may or may not be satisfied if there are legal grounds for this.

Early termination of a contract is most often allowed only to valuable, regular clients of the company. In other cases, the lessor risks losing profit.

If a positive decision is made, the client receives a settlement in which the balance is indicated sum of money, as well as the redemption price. The vehicle can be registered as a property only after all payments have been made.

Procedure

Algorithm of actions on the part of the lessee in case of early return of the amount of money and repurchase of the car:

1. Before the actual deposit of money into the leasing company's cash desk, management must be notified.
2. A regular letter can be sent, or it can be transferred to a specialist during a personal visit.
3. The letter is reviewed within several days. For these purposes, a special commission is being formed. Also, based on the results of the meeting, the payment schedule may be changed, payment receipts will be examined to determine whether the client paid the fees in good faith.
4. Based on the results of the meeting, a decision is made to satisfy or reject the client’s request.
5. If there are no objections from the lessor, an additional agreement is concluded with the client. This document provides the calculation and balance of the amount, and also indicates the redemption price of the car. New payment rules are being established. When partial repayment a new schedule is being drawn up.

The refusal is most often given to the client if the leasing amount is large and if early repayment occurs the lessor will lose a large amount of money.

In accordance with the Law “On Leasing”, early payment should be made only after one year has passed from the date of execution of the contract. This is due, first of all, to the fact that otherwise, if the property is transferred to the client, the agreement may no longer be recognized as a leasing agreement, which means tax problems will arise.

After the agreement on early redemption is signed by both parties, an act of acceptance and transfer of property is also drawn up. documents on the transfer of ownership are drawn up.

The client independently registers the vehicle at the traffic police department after receiving the PTS document.

Early repayment leasing can be:

In the first case, the final payment under the contract is made. In the second, the client pays an amount greater than the established monthly payment, but not sufficient to completely cover the debt.

If you do not agree on an early payment, a situation may arise in which the transaction will not be considered closed, despite the fact that the client monthly paid more than the amount required under the agreement.

The warning is given primarily so that the lessor makes a recalculation and changes the payment schedule.

When sending an email, the client must certify that it is valid digital signature. You can apply for it at the Russian Post Office or Rostelecom.

The contract specifies the exact number of days in which the application must be submitted. It is best to send the letter 10 days after payment is made ahead of the deadline established by the contract.

Features of writing a letter for a leasing company:

1. Individuals can write a letter on plain paper; other requirements apply to legal entities. Only letterhead or a sheet of paper with a corner stamp is used. It displays the recipient's details.
2. In the first part of the letter, in the upper corner in the form of a column, write down the data of the head of the leasing company:
   • manager position;
   • Business name;
   • Full name of the head;
   • legal address with index.

1. After listing the data, the word “Appeal” is written down as one line. You should start with the words “Dear...”. Then a request for early repayment is made.
2. In order for the application to be accepted, it is important to correctly compose the text of the letter. There are the following key points:
   • the request is stated “I ask you to consider the possibility of purchasing the vehicle and closing contract No...”;
   • Next, you must indicate the make of the vehicle, its an identification number and state numbers signs;
   • the last paragraph indicates why early repayment is planned.

1. The very last paragraph contains the client’s signature and date.

When composing a letter, you should take into account that valid reasons for early redemption are the following:

1. Appearance Money to purchase a car.
2. The need for the vehicle to become full ownership legal entity.
3. Changes in the conditions of use of equipment.
4. The management of the lessee decided to buy out the vehicle.
5. There were economic reasons.

In order for the vehicle to be purchased from the lease after the letter is received and accepted, an additional agreement is concluded.

How recalculation occurs

If not carried out full repayment leasing payments, that is, the balance of the amount is paid and the vehicle is purchased, or the client wishes to change the repayment schedule, a recalculation must be made.

Recalculation is a guarantee that all obligations not only to the lessor, but also to the tax authorities will be fulfilled. If done correctly, the client will not have to pay property taxes. Recalculation can begin only after concluding an appropriate agreement with the leasing company.

Features of recalculation:

1. With partial payment, the repayment period of the debt, leasing interest or the amount of the monthly payment are reduced.
2. In case of full repayment, the recalculation procedure is not performed. The process of re-registration of property into the ownership of an individual or onto the balance sheet of an enterprise begins.

If the client paid more than the amount required under the contract, but did not warn the leasing company, then penalties and interest will be assessed.

Features of closing a leasing agreement under certain circumstances:

1. If damage to the leased item or its loss occurs during the validity period of the contract, the obligation to pay compensation falls on the lessee. In case of property insurance, the amount necessary to restore the vehicle will be paid.
2. In case of early repurchase of the leased object, the legal entity is obliged to take appropriate actions in accounting documents. Certain indicators are established for debit and credit.
3. The contract concluded at the very beginning is an important legal document. It specifies all the rights and obligations of both the client and the lessor. Careful study of the conditions and compliance with obligations will avoid problems.

The direct responsibility of a client who wishes to close the contract early is to warn the leasing specialist via email or regular letter. However, if such conditions for some reason were not specified in the contract, the client can act as prescribed by law.

Source: https://bibiguru.ru/dosrochnoe-pogashenie-lizinga/

Early repayment of leasing - sample letter, recalculation

Ideally, all issues related to early payments by the lessee client are specified in the agreement concluded with the leasing company.

The terms of such a transaction must be reflected in the content of the agreement either as a separate clause or as an additional agreement serving as an annex to the main document.

If such maneuvers occur without agreement with the leasing company, then this is always fraught with increased financial costs for the client.

Where to start

Many lessees, after signing an agreement, may very often have a question: “Is it possible to make early payments of partial payments or the full cost of the leased property?”

It is better when such questions arise before signing the contract or during its preparation than after the conclusion of the transaction.

But even after some time has passed, the parties have the right to enter into an additional agreement on early termination of leasing due to full payment, or an annex agreement to the main agreement that some payments will be made in part.

If you are interested in whether early repayment of leasing is possible specifically in your case, then the answer from specialists and legal experts will be positive for you.

Despite some similarities between leasing and a car loan, the procedure for repaying the contract price is structured according to a more complex scheme. This is especially evident in those relationships that are established in a tripartite manner - between the lessor, supplier and lessee.

Certain stages of correct repayment before the due date, without the risk of penalties, still exist. They add up the same way regardless of whether the conditions for early repayment were specified in the contract or not.

Therefore, when returning lease amounts early, the following algorithm of actions must be taken into account:

1. First of all, even before the actual deposit of early amounts into the leasing company’s account, it is necessary to contact its management in writing.
2. The letter is sent by mail to the company, or given in person to the company office.
3. The submitted letter will not be considered only by the director of the leasing company alone. Your case will be studied by a specially created commission consisting of the board of directors.
4. After this meeting, a decision will be made whether to grant your request or not.
5. If the client receives consent from the leasing company, then an additional agreement on a minor early repayment transaction will be concluded with him. This agreement will establish payment rules, indicate recalculation of amounts and payment schedule, and the balance if repayment is made in part.
6. Upon full repayment of the debt (residual value of the property), with the consent of the lessor, the property will be removed from the company’s balance sheet and transferred to the lessee.

It also happens that the leasing company flatly refuses to give you the right to repay the entire amount ahead of schedule and will insist on only partial repayment.

If the lessor previously purchased the property on credit from the bank, and the debt has not yet been fully paid to the bank, then the lessor will have to additionally regulate the timing of early repayment with this financial organization.

Or it may happen that banks do not really want to lose their profits, or rather, they are not going to do this at all. Especially if it concerns large amounts. Therefore, the client runs the risk of being rejected.

If you send a letter by email, it must be certified by your electronic signature, whether you are an individual or an enterprise that has leased some property. Such a signature can be issued at Rostelecom or Russian Post.

It is very important to draw up the letter in 2 copies, and receive the second one immediately after certification of the incoming document by the secretary or other authorized employee of the leasing company.

Without an entry number, your copy will be of little use from a legal point of view in the event of serious disputes or litigation.

Letter on early repayment of lease

The letter should be submitted no earlier and no later than 10-15 days before the payment is made ahead of the contractual deadline.

The document is drawn up in free form and expresses the desire of its compiler to deposit a certain amount into the account of the leasing company ahead of schedule.

The structure of the letter consists of the following important points:

1. Letterhead letterhead. This requirement applies exclusively to legal entities or individual entrepreneurs. Instead of a letterhead, a corner company stamp can be used, which reflects all the necessary details of the lessee.
2. The address to the head of the leasing company is written in a column on the right side. At this point they write:
   • name of management position;
   • the name of the company indicating its legal form of ownership;
   • FULL NAME. directors;
   • legal address of the lessor (the index must be indicated).
3. After this, an appeal to the manager is written in a separate line in the center. The document does not begin with words indicating its title, in the manner of statements. Here you should start with the words “Dear...(hereinafter initials in full text).”
4. The letter consists of the following key points:
   • starting with a red line: “We ask you to consider the possibility of early repayment...” (if only part of the total amount will be paid) or “early termination of the leasing agreement” (if it is planned to pay the full amount under the agreement);
   • further - agreement number, and from what date;
   • if the agreement contained information about early payments, then the number of the clause of this agreement is indicated;
   • therefore, in the text it is written down - the make of the car, its VIN (identification number), numbers of state registration plates;
   • the last, final detail of the paragraph is an indication of the reason that led to such a decision by the client (written: “in connection with...”).
5. The letter ends with the signature of the originator:
   • if this is an individual, then simply write: “With respect ...” the surname and initials of the compiler, then his signature and date along the line;
   • if the originator is a legal entity, then the letter is signed CEO the tenant enterprise that is the lessee (the scheme for such a signature is indicated in the sample).

How to recalculate

If the lease is not repaid in full, all amounts must be recalculated, as well as a new schedule of lease payments must be drawn up.

When early repayment of a lease occurs and the redemption value is recalculated, this always indicates the fulfillment of obligations not only to the leasing company, but also to tax authorities.

This is due to the loss of economic benefit and effect when adjusting tax obligations. After all, under leasing the tax base does not take into account 18% VAT.

In addition, according to accounting of an enterprise that is a leasing user, the property under financial lease passes as an asset to the cost of this product.

The accounting department of an enterprise can generate depreciation charges with acceleration - by applying a special coefficient (no more than 3).

This method will help in the future to write off the equipment much earlier than when, for example, it would have been purchased not on lease, but on credit.

And the last advantage, which is useful for both legal and individuals– this is the absence of payment of property taxes.

Recalculation must begin only after an additional agreement has been concluded with the client for the recalculation of lease payments with the right to repurchase (or without it).

The recalculation scenario can occur in two ways, depending on how exactly the debt obligation will be repaid:

1. If this is a partial payment, then the reduction will be used:
   • interest;
   • deadlines;
   • amounts in the chart.
2. If this is a full repayment of the entire amount under the contract, then the recalculation is canceled and the procedure for re-registering the property from the balance sheet of the leasing company to the balance sheet of the lessee enterprise, or into the ownership of a private person who is the tenant, is launched.

It turns out that recalculation is carried out only in cases where the client makes partial payments ahead of schedule, and not the full amount under the contract.

In the event that you paid the payment (whether in part or in full) without advance warning of your actions to the lessor, then fines, penalties, or penalties will be assessed under your agreement.

If you cannot pay them right away, and the contract is not yet planned to be closed, then the payment schedule will be recalculated taking them into account. This means that additional interest on fines will be included in the remaining amounts.

Are companies willing to agree to early payment?

To avoid a pre-ambiguous interpretation of the terms of the leasing agreement, legal experts recommend discussing all requirements for early repayment of payments by the parties at once.

Careful consideration of all issues and details of the agreement will be required. For example, it will be necessary to determine the mechanism by which the lessee will have the right to act when he wants to return some amount ahead of schedule.

Sometimes a certain limit is even set on the amounts that can be used as early partial payment of the contract. But this is rare and only for clients with complex conditions for signing an agreement.

Timing is also important. Lessors, as a rule, are not very willing to agree to accept payments ahead of schedule if 6 months have not yet passed from the date of the transaction.

However, according to the law “On Leasing” (“On Financial Lease (or Leasing)” in Part 1 of Article 19 legislative provision No. 164-ФЗ dated October 29, 1998, which is in the current version in 2018) there is no mention of such a right of the lessor as prohibiting the tenant or lessee from covering their debt to him ahead of schedule.

According to experts, partial or full early repayment of a leasing agreement is fraught with tax audits for enterprises.

This can happen if you decide to pay off your car lease in the same current year that the deal was signed. Experts also do not recommend paying off money ahead of the payment deadline according to the leasing schedule.

This is not practical from the point of view of economic benefit for successful management economic activity in business.

Source: http://provodim24.ru/dosrochnoe-pogashenie-lizinga.html

Early repayment of leasing - accounting, tax accounting, posting, sample

Leasing relations between two parties are concluded using legal contract, which specifies the rights and responsibilities of each participant.

The conclusion of such a document requires a thorough analysis and elaboration of all the details of the leased item in order to avoid problems in the future. The main point in this legal document becomes the determination of the possibility of early repayment.

Peculiarities

Current Russian legislation does not restrict the lessee from performing this action. He has the right to pay debt obligations before the due date. In this case, the lessor has no right to deprive his other party of such action.

The leasing agreement must also provide for payment before the due date and redemption of the leased asset. The recalculation of the new payment schedule is the responsibility of the lessor immediately after receiving the early payment. It also provides for the possibility of full fulfillment of obligations to the lessee and the tax authorities.

But the lessee should think about investing free funds rather than paying off debt obligations ahead of schedule. This is due to the fact that early repurchase of the leased asset reduces the economic effect of regulating and improving taxation.

Most often, the early purchase of the leased asset is specified in the contract after the expiration of 9-12 months. This is done to increase the lessor's profits. If the lessee nevertheless decides to buy the property ahead of schedule, then he will have to pay interest for all other periods of proper use of the loan funds.

Many companies providing such services also include a repurchase schedule with the main contract. It is in this document that all deadlines and possible payments in excess of the established ones are prescribed. The available payment ratio is specified for each period.

Some companies do not specify the procedure for determining the value in the event of an early repurchase. More often in this situation, the cost is agreed upon between the two parties. And in this case, the property will have to be purchased at a higher price, based on the seller’s discipline.

In addition, the leasing agreement has the right to provide for partial early repayment of obligations. In this case, payments for the future period are recalculated. This can be done to minimize the size of the payment for the concluded transaction.

Consideration of the application

Similar to loan obligations, the lessee, under a concluded agreement, has the right to pay the remaining amount ahead of schedule at any time. After paying the entire amount, the lessor must fulfill his obligations to deliver certain property for which the agreement was concluded.

Also, the lessee has the right to pay a larger amount, covering only part of the debt, thereby minimizing payments on obligations.

Compared to a regular loan, early repayment has several nuances, and in general the procedure is somewhat more complicated. The initial action of the lessee is to contact the lessor with a written application. It stipulates the desire for early repayment.

This written appeal is considered not only by senior management-directors, but also by all founders and owners. The decision is made collectively. After such a meeting it is adopted common decision about satisfaction or non-satisfaction of the requirement.

Companies engaged in such activities are reluctant to satisfy the client’s request. After all, this is where they lose part of their profits. Moreover, they draw up the same agreement as with consumer lending at a credit institution.

That is why early repayment is most often a privileged service for valuable clients.

If he agrees to full early repayment, the lessor draws up a purchase and sale agreement with a notary. This legal document is signed in duplicate by both parties.

After completing the documents, the lessee pays the required amount in full. Payment is made according to the invoice issued by the lessor. The balance of obligations and the amount of the ransom are indicated there.

As soon as the payment is received into the company's account, the property is subject to withdrawal from the lessor's balance sheet. Next is preparing financial statements with the action being carried out in all respects, a transfer act is drawn up.

Things to remember

Early repayment of a lease is a serious and responsible matter. All deadlines must be met. You also need to enter this action in the “Tax Accounting” form when making quarterly mandatory payments.

To repurchase the collateral ahead of schedule, the lessee must fill out a form and submit it to the company for review.

If the leased asset must be registered according to government rules, then this must be done by the lessor after receipt of payment.

For example, a car is subject to mandatory re-registration, since it previously belonged to a company, but is now the property of another person.

If early payment is carried out within a period of less than a year after the conclusion of the contractual relationship, then such an action will arouse interest among Tax Service. Usually, civil service decides to conduct an investigation into fraud.

This is justified by the fact that many companies disguise lease relationships with the right to buy in installments of debt obligations.

If the leasing agreement is terminated at the initiative of the lessor company

Many companies in their agreements imply the possibility of early termination of the document if the lessee fails to fulfill at least one obligation.

That is, the client can lose the desired property at any time due to delay or lack of insurance. The recipient is obliged to find out in the contract and force the lessor to specify all the conditions under which such an action can be performed in relation to him.

The list for terminating the contract is prescribed either in a legal document or in an agreement. It also sets out the procedure for mutual settlements with the recipient of the property. This is an important condition that should be under the close attention of the recipient.

The ideal relationship option is that the document states that upon termination of the document or removal of the item, the lessor covers the debt of the recipient of the item. The remaining available funds are transferred to the recipient of the object.

Termination of the leasing agreement under the circumstances

There are often cases when the leased item is lost or partially deformed. If this happens during the validity of the contract, then everything is clearly spelled out here. For example, if a car is stolen or a traffic accident occurs beyond repair.

Responsibility for the safety of the property lies with the lessee. That is why the tenant is fully responsible for equipment damage due to damage or theft. If the item is lost, he is obliged to pay monthly payments within the period specified in the contract. Moreover, he pays regardless of his guilt or lack thereof.

In many companies, the leased item is required to be insured throughout the entire term of the contract. The obligation to pay insurance premiums is also specified in the concluded agreement.

The owner-lessor becomes the beneficiary. So it is beneficial for the company to receive cash under such circumstances. Using the amount received, the company pays the lessee's debt.

In the event of loss or destruction of the leased asset, several options are possible. This is either covered entirely by insurance or if it does not fully cover all losses. In the first case, the entrepreneur calculates the final amount of the transaction and covers it with insurance. The remaining funds are transferred to the recipient.

In the second case, the feed occurs statement of claim to court to recover the required amount from the recipient.

Accounting and tax accounting

If the lessor wishes to buy the property ahead of schedule, he is obliged to carry out the action in his accounting department. To do this you need to know the features and nuances.

The lessee paid the obligations ahead of schedule. Accounting tax accounting posting:

1. Debit 08, Credit 76 - sale of property;
2. Debit 19, Credit 76 – calculation of value added tax;
3. Debit 01, Credit 08 – commissioning;
4. Debit 44,26,29,2.20,23, Credit 02 – depreciation on a monthly basis.

Balance of debt obligations upon early redemption:

1. Debit 97, Credit 02 – urgent accrual without VAT;
2. Debit 91-2, Credit 02 - urgent accrual without VAT when the lessee uses his own savings.

The lessee's agreement is a mandatory legal detail that reflects the most basic obligations and rights of each party. Such documents can be signed only after careful review.

If any point is unclear, then it is worth passing this document to a highly qualified lawyer for review. Early repayment of obligations must be reflected in this legal document. Only in this case the recipient has the right to perform this action.

We will look at how the process of early termination of a leasing agreement occurs in this material. In addition, we will touch upon important points that deserve attention at the stage of planning and executing a leasing transaction. Let’s break it down point by point and tell you how early repayment of a lease occurs.

Why is there a need for early termination of a leasing agreement?

When it comes to loan agreement, then in this case, if there is a need for early completion, the bank must carry out a full recalculation financial conditions. When leasing, receiving recalculation is also preserved, but occurs somewhat differently.

Below are the reasons why a lessee is thinking about early termination of a leasing agreement, regardless of the subject of leasing:

• Availability of a sufficient amount of financial resources and the desire to minimize overpayments on leasing. Here you need to take into account that not all leasing agreements contain a corresponding clause, according to which recalculation is made. In some cases, additional approval is required.
• An urgent need to make the leased asset the property of the company. Such situations are not uncommon, and appear when several companies merge into one or a share of a company is sold.
• Changing the operating conditions of the leased asset. The contracts for this service indicate what actions can be performed, regardless of the type of property. For example, if it is necessary to lease property to a third party, approval by the leasing company or 100% purchase will be required.

Not only the lessee, but also back side can act as an initiator, which happens when there is a strong need for financial resources.

Early repurchase by the lessee

Although the client’s wishes may be a sufficient basis for recalculation, the terms of the leasing agreement must also be taken into account. Thus, the terms of the agreement may provide that there is a minimum period during which a financial lease is possible - 1 year. If the property is purchased before the expiration date of the contract, then it is important to take this fact into account when making tax entries.

Most contracts stipulate that early redemption is not a reason for recalculation - interest deposited at signing must be paid.

Termination of the contract by the lessor

Early termination of a leasing agreement rarely benefits the company that provided the property for financial lease. Since she has already acquired ownership of the property with the purpose of transferring it to a specific company. Retransmission will require time, financial and other costs.

However, in some situations, such an outcome is possible. For example, when clients do not pay payments under the contract for two or more months or do not comply with other terms of the contract. In this case, the lessor has every right, even without the intervention of judicial authorities, to terminate the relationship. A preliminary request is made to the client, with an offer to fully repay the remaining debt with the subsequent transfer of the leased asset into the ownership of the lessee. If there is no response or it is unsatisfactory, the property is confiscated.

The contract may stipulate conditions regarding unilateral refusal to fulfill the contract, but this rarely happens - in transactions with large sums of money.

How is the redemption value of the leased asset calculated?

Most complex issue- how much the client must pay upon early termination of the leasing agreement. Typically, this requires repaying the full amount stipulated by the contract, regardless of the time of repayment and the remaining term. Even if the agreement contains a recalculation clause, the lessee will still have to pay additional amounts - compensation for the leasing company’s expenses for processing the early termination of the leasing agreement.

It is rarely possible to complete the calculation on your own, especially if the conditions for early completion are not prescribed in advance. In this case, you need to send a request indicating the date when you plan to make the redemption. In this case, the lessor will independently make the calculation and send a response letter.

What is needed for early redemption

Companies that provide leasing services have specialists who “guide” the client through the stages of early repayment. Below is a list of the “steps” that make up the process:

• First, a written request is sent regarding the calculation of the amount required for full redemption, indicating the date. Sample forms are obtained from the manager of the leasing organization, or on its official website;
• In response, the lessor will send a letter indicating the amount and prepare an additional agreement. It is not valid in electronic form, so you will need to come and record it in paper form with signatures and seals;
• After signing, the lessee pays a certain amount on the specified date;
• Having received financial resources, the leasing company begins processing the transfer of the leased asset into the ownership of the lessee.

Early termination of a leasing agreement at the initiative of the lessee, in other words, early repurchase of the leased asset is not such a rare situation.

When it may be required

The most optimistic option for early redemption assumes that the lessee has available funds and intends to buy the property early in order to reduce overpayments. At this moment, the entrepreneur’s mind is dominated by the analogy with bank loan. And this is not a completely correct analogy.

The second option is a situation that lawyers call a significant change in the conditions of use of the leased asset. In practice it looks like this. Romashka LLC wants to sell the loader to Vasilek LLC. But the loader is leased, and our Romashka cannot do this without an early buyout.

The third option: the company merges, is absorbed - in a word, a transformation of the legal entity occurs. In this case new owner, will likely require that all assets be owned by the company.

Finally, there is a fourth option, which is not widely discussed. Some lessees seek to disguise a purchase and sale agreement as a leasing agreement. They make a significant advance and after some time declare their desire to buy out the leased asset ahead of schedule. This is an extremely risky option and below we will tell you why.

Start with a contract

The practice of leasing companies regarding early purchase of property is heterogeneous. If you already have a valid contract, then start by studying the clauses on early redemption. If you are just planning to lease something and do not exclude the option of ending it early, then choose a company that is as loyal to this as possible. In general, as the survey shows, a significant part of companies provide for the possibility of early repurchase even at the conclusion of the contract and add a line to the payment schedule showing the volume of payments required to complete the transaction.

Loan analogy

We have already said that analogies with credit are inappropriate here. The structure of a leasing transaction is more complex than a credit transaction; both the bank and Insurance Company. Financial obligations to them affect the amount that must be paid for the early redemption of the property. The table, which was compiled based on a survey of leasing companies, presents a wide range of options.

From what period can you fearlessly buy out the leased asset?

The risks posed by early termination of a leasing agreement were summarized Kirill Zimarev, head of leasing practice at Stare Legal:

Civil risks. The lessee, by purchasing the property ahead of schedule, becomes the owner of the leased asset in the same way as in the case of purchasing the leased asset at the end of the lease agreement. However, if the lessor used the leased asset as collateral, then the lessee needs to ensure that the collateral record is cleared by the lessor.

Tax risks. Tax risks lie in the possibility of the tax authority recharacterizing a leasing agreement into an installment purchase agreement. In this case, the application of leasing tax benefits will be considered unjustified, namely: instead of paying VAT on leasing payments throughout the entire term of the leasing agreement, the lessor will be charged VAT on the entire cost of the property from the date of sale (there are such cases, for example, the Resolution of the Arbitration Court of the Western-Russian Federation). Siberian District dated 03/02/2018 N F04-6306/2017 in case N A81-3829/2017). In theory, having recognized the use of accelerated depreciation as unlawful, the tax authority can recalculate and additionally charge property taxes, but we did not find such cases.

However, based on the analyzed judicial practice, such re-qualification was carried out by the tax authorities not in cases of early redemption of the leased asset, but in cases where the leasing agreement initially contained some defects. For example, a leasing agreement was concluded between interdependent persons, no payments were made between them, etc.

The absence of such disputes in judicial practice can be explained as follows. Early repurchase of the leased asset terminates the use by the parties to the agreement provided benefits. From the moment of redemption, all VAT payable on future lease payments is paid by the lessor. Accelerated depreciation ceases to apply. Thus, there are no additional tax risks in connection with the early purchase of the leased asset.

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Conditions for early termination of the leasing agreement. Lessors' position

Company name	From what period can the contract be terminated early?	What does the client pay for early repurchase besides the cost of the leased item?
	After the 13th leasing period (i.e. 13 months from the date of leasing).	The amount of early repurchase is indicated in the leasing payment schedule for the month of the planned repurchase in the column “Price of early repurchase of the leased asset”, “Price of the leased asset to be paid”. The lessee also pays the lease payment for the current month and all debts and penalties (if any)
	No restrictions	DV cost = Lease payment for the current month + DV amount indicated in the column “Early repurchase amount with VAT” of the schedule according to the line of the corresponding calendar month+ Amount of the redemption price of the Property
	After 12 months	Total amount payments provided for in the lease payment schedule as of the closing date
	Not earlier than 6 months after the conclusion of the leasing agreement	The lessee makes the remaining payments with a discount for early completion and ownership of the leased asset is transferred to the lessee
	From 6 months	In case of an early schedule, the interest on the loan is recalculated. Therefore, the client pays the cost of the PL and interest until termination
	From 13 months	In addition to the LP, the lessee pays a redemption payment equal to the balance of the debt for the cost of the vehicle and the shortfall in expenses incurred by the lessor related to the leased vehicle
	6 months after the leased item is issued to the client	A discount is provided on the balance of payments; the interest under the leasing agreement is not subject to recalculation. The discount is calculated individually.
	From 13 months	Current lease payment and early purchase price stipulated in the lease agreement
	From 7 months	In addition to paying the balance of the provided fixed financing (the leased asset), the lessee pays: 1) bank interest per month of early repayment 2) insurance reimbursement if it is included in lease payments 3) income of the leasing company for the month of early closure
	On agreement of the parties	On agreement of the parties
	From 6 months from the date of the PPPL/commissioning certificate	1) Costs of the lessor for the provision of leasing services 2)% for the use of funds during the period of validity of the leasing agreement
	From 13 months	Costs of servicing financing as of the date of early closure, LC income and other mandatory payments provided for by the current legislation of the Russian Federation (if any)
	From 6 months	The entire amount stipulated by the contract is paid, but a discount may be provided on the cost of financing that was saved due to early repayment of the contract
	After half the term of the leasing agreement, but it is also possible to close the leasing agreement earlier	Leasing payment and redemption price
	Not earlier than 12 months after the start of the leasing period	The early redemption amount is reflected in the schedule
	From 2 months	The lessee must submit a written application 30 days in advance for partial repayment under the contract (the amount of leasing payments according to the schedule will be recalculated downwards, overpayments will be reduced), for complete early closure of the contract - 10 days in advance (bank interest will be recalculated)

There is a new trend in the leasing market: over the past year, lessees are increasingly seeking to buy out the financial lease object ahead of schedule. As experts say, such clients are guided by the desire to optimize expenses and the availability of free funds that appeared after the crisis. However, such a desire to shorten the term of the leasing contract ahead of schedule is greeted very coolly by companies providing such services. Only the most important partners for the lessor can count on loyalty.

View from the outside

According to Roman Romanovsky, leading analyst of the Expert RA credit institution ratings department, the possibility of early closure of the transaction is determined by the terms of the contract. “As a rule, a leasing agreement provides for the possibility of early closure of the transaction, that is, the purchase of the property, subject to payment of all lease payments,” he says. Let us recall that, according to paragraph 1 of Art. 28 of the Federal Law “On financial lease (leasing)”, lease payments are considered to be the total amount of payments under the leasing agreement for the entire term of the agreement. At the same time, the amount of payments under the leasing agreement includes: reimbursement of the lessor's costs associated with the acquisition and transfer of the leased asset to the lessee; reimbursement of costs associated with the provision of other services provided for in the leasing agreement; lessor's income.

The specialist emphasizes that cases of recalculation of leasing payments downwards are much less common and usually only for the most “friendly”, that is, important, clients. “Leasing companies relatively rarely practice such recalculation, since they must have the same agreement with the bank on early repayment of the loan,” says Mr. Romanovsky.

In cases of the most favorable development of events for the client - recalculation of payments - he receives some financial benefit from early closure, the expert admits.

Risks

From a legal point of view, the amount of leasing payments can be changed by agreement of the parties, but only if otherwise is not provided for in the leasing agreement, says Marina Krasnobaeva, a representative of the law firm Yukov, Khrenov and Partners. According to her, the current legislation does not contain direct prohibitions on the inclusion in the leasing agreement of conditions for early payment of leasing payments. "General norms Civil Code on rent, as well as Article 28 of the Leasing Law, directly provide that the amount and timing of rent (leasing payments) are determined by agreement of the parties,” emphasizes Ms. Krasnobaeva.

However, the lawyer warns: a leasing agreement executed by the lessee ahead of schedule (in particular, within a period of less than a year from the date of execution) will become the subject of close attention tax authorities during the next tax audit. “Often, concluding a leasing agreement with the right to make early lease payments covers the purchase and sale of property with installment payment or lease with the right to buy,” admits the expert.

For their part, banks are ready to approach the issue of early repayment of lease payments individually. As stated by Andrey Konoplev, General Director of VTB Leasing OJSC, this division works with large and medium-sized clients, implementing an individual approach to each transaction, taking into account the financial condition of the potential lessee and the liquidity of the leased asset. Mostly, contracts are concluded for a period of five years with the following leasing items - railway transport, aircraft, special equipment, equipment, etc. “The provisions of the leasing transaction provide for the possibility of early redemption of the leased asset. The terms of such a repurchase, as one of essential conditions leasing agreements are determined by a decision of a collegial body at the stage of making a decision on concluding a transaction,” says Mr. Konoplev. According to him, if the right of early redemption is not initially provided for in the leasing agreement, but the lessee turns to the lessor with such a request, the parties agree on the conditions for terminating the leasing transaction individually.

A word from companies

In the company "RESO-Leasing", which offers clients all types of commercial vehicles, the standard conditions for financial lease are: advance - 20%, term - two to three years, and increase in price - from 7%. “Of course, our leasing agreement includes the possibility of early redemption of property - under this, the lessee pays a small compensation when re-issuing documents, but does not pay future interest,” says Sergei Kalinin, director of the development department of RESO-Leasing LLC. However, he admits that the company is not interested in such short-term cooperation. “A leasing company is a kind of credit institution, which makes money on installments, that is, we are primarily interested in the full fulfillment of the contract, both in terms of the amount of payments and the term,” emphasizes Mr. Kalinin. “We are not very interested in early repurchase, and we do not stimulate it in any way.”

Carcade also agrees with their colleagues. “The leasing agreement is long-term. And by concluding it, the lessor invests certain funds and plans to receive a certain profit. Therefore, long-term termination of the contract is not beneficial for any leasing company,” says Carcade. However, the lessor provides its clients with freedom of choice: as Carcade assured, the lessee has the right to terminate the financial lease agreement after a year - this condition is stated in the document. However, if previously a commission of 3 thousand rubles was provided for termination of the contract, now, the company assures, there is none.

Wanting to retain customers, Carcade revised the terms of the leasing deal. The initial payment was reduced, the contract term, on the contrary, was increased, and the choice of commercial vehicles increased to 50 vehicles. As the company stated, based on the fact that light commercial vehicles are the most liquid and in demand, the most favorable financing conditions have been developed for it. Thus, the price increase will be from 0%, the first payment - 9%, the redemption payment - from 1% to 10%, the contract term can now range from 12 to 48 months. For trucks and special equipment, the first payment is higher - from 25%, payment terms - from 12 to 36 months, but the payment schedule in both cases is the same or decreasing.

In the Baltic Leasing Group of Companies, clients are also given the opportunity to purchase the leased asset ahead of schedule throughout the entire term of the contract. “The redemption value in case of early fulfillment by the lessee of its obligations under the contract consists of the balance of the principal debt on the date of early redemption,” says Maxim Utkelbaev, a specialist in the company’s vehicle leasing department. “In terms used in the field bank lending, the lessee needs to repay the loan.”

According to Mr. Utkelbaev, in leasing agreements with Baltic Leasing, with voluntary early redemption, the redemption price of the leased asset does not include the leasing interest for the use of funds for the remaining lease term. At the same time, the company representative emphasizes that such generosity is not typical for the market. “Among operators of the leasing services market, there are often cases when the agreement obliges the lessee to pay the entire amount of leasing payments due to the lessor, including leasing interest, as well as additional expenses leasing company,” emphasizes Mr. Utkelbaev.

The State Transport Leasing Company (STLC) also promises preferential conditions to a client who decides to repay lease payments early. Standard terms in State Transport Leasing Company, which offers clients leasing all types of commercial vehicles, represent a 15% advance, an average annual rate of increase in price from 4% and a contract term from three to five years. “If for some reason the client expresses a desire to terminate the leasing agreement early and buy the property, we give him this right,” says Vladimir Dobrovolsky, director of business development at State Transport Leasing Company. According to him, the calculation of the redemption price is individual in each case, but General requirements consist of covering the redemption price, the company’s costs for acquiring the leased asset minus the costs already covered, as well as the quarterly property tax and the company’s margin for several months. “Today these are some of the most preferential terms on the market,” says Mr. Dobrovolsky.

Manufacturers

Unlike intermediary companies, automakers have the opportunity to offer their clients more flexible terms for leasing the selected vehicle, but early repayment of the latter is often not accompanied by special conditions. According to experts, the majority of large automakers have their own leasing companies, which are designed to stimulate demand for the equipment they produce. “This is possible for several reasons: firstly, the subsidiaries of large foreign concerns have access to cheap Western money, and secondly, there is a need to constantly stimulate sales of the parent company, and not to maximize their own profits,” says Vladimir Dobrovolsky. However, if the contract is repaid early, the company is unlikely to receive additional profit, so this aspect of cooperation is not always highlighted as a separate component.

Thus, the Volkswagen Group Finance (VGF) company provides clients with the opportunity to finance the entire Volkswagen model range on lease, including commercial vehicles. “Moreover, as part of the joint CarePort Financing program (for commercial vehicles), customers are provided with a discount on a car, which makes its purchase even more profitable,” the company promises. The advance payment from the FGF is 0%, the financial lease period reaches 48 months. In addition, a flexible system of settlement costs is expected, and for large international clients - the possibility of financing in euros.

“If desired, the client can close the leasing agreement ahead of schedule; to do this, it is only necessary to notify the FGF of his intention in advance,” the company says. “If the leasing agreement is closed earlier than the first half of the term, the client pays all payments under the agreement. If this happens in the second half of the contract term (but not earlier than the 12th month), the amount of the leasing contract is recalculated and no additional interest is charged for this.” However, the company emphasizes that the number of clients who decided to close the leasing agreement early does not pose a threat to the company’s profit: according to the Federal State Fund, they are only 2% of the total number. “There are no special conditions for this type of client, just a positive financial history in our company, which our specialists turn to when the client re-applies for cars,” says the FGF.

Market participants note an increase over the past year in the number of lessees wishing to buy out leased equipment ahead of schedule. “The need for early repurchase of the leased asset is dictated primarily by the lessee’s availability of temporarily free funds and the desire to optimize costs associated with fulfilling obligations under the leasing agreement,” says Maxim Utkelbaev from Baltic Leasing.

However, you will have to fight for your right to buy a used vehicle or technical equipment. Despite the fact that the possibility of repaying leasing payments before the end of the contract may be in the contract itself, the inclusion in the leasing agreement of a condition on the lessee’s right to early fulfillment of obligations to make leasing payments is rare in practice, says Marina Krasnobaeva. “These conditions are included in leasing agreements concluded for a long term, and are practically not common when concluding short-term contracts for the following reasons,” says the expert. According to her, leasing agreements Vehicle and equipment are concluded by companies that do not have sufficient working capital for the acquisition of property. In this regard, early repayment of a short-term leasing agreement by the lessee actually neutralizes his interest in using the leasing institution.

The conclusion of a leasing agreement, like a credit agreement, requires careful consideration of all details in order to avoid ambiguous interpretation. A separate point that should be as clearly defined as possible is the possibility of early repayment of the lease.

The law does not prohibit the purchase of property before the established period, and the leasing company cannot deprive its client of this right.

Consideration of the application

By analogy with a loan, the client has the right to pay either the entire remaining amount and, thus purchasing the property, or part of it, reducing the amount of monthly installments. Unlike a classic bank loan, the procedure for early settlements between the parties is somewhat more complicated. First of all, the client must contact the management of the leasing company with a written statement.

The appeal is not considered individually by the director, but collectively - at the board of directors or meeting of founders. After considering the appeal, a decision is made on the possibility or impossibility of satisfying it.

Leasing companies are quite reluctant to make early mutual settlements, since in this case they need to draw up the same agreement with the bank, and, in addition, they lose part of the profit. For this reason, the most valuable clients have an advantageous chance of early repayment of the lease.

If they agree to full repayment of the debt, the lessor prepares a purchase and sale agreement, which is signed by the parties after review. After this, the lessee is issued an invoice for payment.

This document indicates the balance of the debt and the amount of the redemption payment. After final payments are made between the parties, the property is removed from the leasing company’s balance sheet, financial statements are prepared and a transfer and acceptance certificate is drawn up.

Things to remember

If the property being redeemed is subject to state registration(for example, a car), it must be re-registered in the name of the new owner, since until the moment of redemption, the owner was the leasing company, and, therefore, the property was registered in its name.

It must also be remembered that repayment of leasing within a period of less than a year from the date of conclusion of the agreement will most likely arouse the interest of the tax authorities when conducting an audit. The reason for this is that in this way they often disguise the rental of property with the right to purchase or the sale and purchase of property by installments.