Nowadays, almost every company owns a wide variety of vehicles, which are indispensable for the day-to-day running of the company. For economical and profitable financing, the sale and lease back model offers a supportive and cost-saving solution. This very modern form of financing enables companies to release capital tied up in operations, thus increasing liquidity and competitiveness ratios.
What is sale and lease back of vehicles and how does it work? In the sale and lease back contract, the leasing company acquires a specific leasing object from the future lessee. Draws up an appropriate contract with the lessee, taking into account the interests of the lessee. As a result, the lessee manages to increase the liquidity rate and significantly improve other key figures of the balance sheet. This procedure is used especially for real estate, machinery and vehicles.
In the case of traditional car leasing, which is also known to private consumers, the lessee makes a down payment and pays the remaining part of the price in the form of monthly or annual installments, depending on the agreement. However, the sale and lease back procedure involves transferring the general rights of ownership of the vehicle in question to the lessee before the contract is signed. In a following step, he sells the car to the leasing company and enters into a usage contract. The term can be individually. Set according to the needs. Often lessees come to an agreement. Leasing company but agreed on a period of four years.
Before considering the method, the lessee usually asks himself what requirements the vehicle must meet in order to be able to conclude a sale and lease back agreement. In principle, the procedure is suitable for all types of vehicles. Nevertheless, usually larger vehicle fleets or even expensive and exclusive vehicles are preferred.
There is also no defined minimum value for the car to be brought in, but from an economic point of view, the use of the procedure is worthwhile only from a value of 100.000 Euro or more. Furthermore, personally tailored contract design options offer the most customer-friendly solution approach, so that the search for a professional partner takes on a decisive role.
What are the advantages of sale and lease back for companies?
The concept of sale and lease back for vehicles is very popular nowadays and is considered a well-known and modern financing option. Both large companies and smaller. Medium-sized companies benefit from the advantages of the method.
The reasons for a sale and lease back contract vary from company to company. First of all, it should be noted that the lessee gains liquidity, as he exchanges the tied-up capital for money. Since the rates are rather low, important investments can be made in the future that will increase the competitiveness of the company. This is how some companies manage to become pioneers in their industry and dominate the market noticeably.
But the companies not only increase their equity capital and thus increase their investment activities, but are also relieved financially thanks to the omitted costs for maintenance, servicing and repairs. Furthermore, there are tax advantages for companies with the help of the sale and lease back process. Since the fee can be applied tax-reducing over a long period of time, companies expect worthwhile cost savings. Therefore leasing contracts usually extend over several years.