Historically, the most widespread type of financing for Russian companies to acquire new equipment or vehicles has been bank credits.

This was due to two factors: (1) the ongoing absence of alternative sources of financing; (2) the fact that Russian producers are insufficiently informed about other instruments, such as leasing.

The main differences between bank credits and leasing are laid out below.

Bank credit

Leasing at Europlan

1. The maximum term of a bank credit on the market for banking services is 12-24 months. 2. The principal on a credit is paid from new profit. 3. Liquid collateral and a current account history are required by the creditor bank. 4. The mechanism of accelerated amortization with a coefficient of 3 is not applied. 5. As a rule, banks make additional demands before providing a credit (the opening of an account, transfer of turnover, etc.).

1. Financing for 24-60 months. 2. Leasing payments are listed as costs, reducing the taxable base for profit tax. 3. It is sufficient to have 25%-30% of the cost of the equipment to make an advance payments, no collateral required. 4. By applying accelerated amortization with a coefficient of 3, savings are made on property tax. 5. Generally no additional requirements are made, and projects are dealt with quickly.

As you can see from this comparison, the leasing conditions listed above are more attractive than those offered by commercial banks when providing credits. Especially as the government has provided tax breaks for leasing, which are needed by developing companies as never before.