Leasing of used cars. Walkthrough
In leasing, you can buy not only a new, but also a used car. We explain what the whole procedure looks like.
Leasing a car, new or used, can be more attractive than a regular car loan. When it comes to large companies or even individual entrepreneurs, these include: tax breaks.
In an operating lease, all lease fees are completely tax-free for the car user. On the other hand, in the case of financial leasing, the cost to the user of the leasing vehicle will be interest and depreciation.
With regard to the tax on goods and services, in the case of operating leasing, the lessor (leasing company) will issue invoices for each payment. Meanwhile, in the case of financial leasing, VAT must be paid in full upon receipt of the car.
It is also possible to write off VAT, but only if the car is sold for the so-called. full invoice with VAT. If the commission agent sells the car on a VAT markup invoice, we will not be able to deduct this tax.
You need to be aware of the restrictions on deducting VAT on company cars (regardless of whether they are bought, leased or rented). Taxpayers are entitled to a 50% deduction. VAT is added to the price of vehicles whose authorized maximum mass does not exceed 3,5 tons, without any quota restrictions. Of course, cars and other vehicles with a gross weight of more than 3,5 tons are subject to a XNUMX% deduction.
Such a deduction (50% VAT) is due when the car is used in the so-called. mixed activities (both for corporate and private purposes). For general purpose vehicles, a VAT deduction of 50% is also applied to all operating costs (eg inspections, repairs, spare parts). It is also possible to deduct VAT on fuel, but not earlier than July 1, 2015.
Taxpayers can deduct 100 percent. Input VAT on the purchase and use of cars, as well as on the purchase of fuel for them. However, this is only possible if the vehicle in question is intended for company use only. You must report this to the tax office and keep a record of the use of this vehicle.
Operational and financial leasing makes it possible to buy such a car after the completion of payments, but the lessee is not obliged to do so. In the case of financial leasing, the car is part of the assets of the company that uses it.
The dominant contracts in Poland are operating leases.
In addition to tax benefits, obtaining a lease is also easier than going through the procedures required by banks to obtain a loan.
The tenant will need company registration documents, an identity card, REGON, NIP, PIT and CIT declarations confirming income for the last 12 months, as well as a certificate from the tax office that there is no debt to the state. An additional document in the case of leasing used cars will be an appraisal certificate, which will prevent the purchase of a faulty car.
It is also worth remembering that leasing companies are not so much interested in a very thorough inspection of the car we have chosen, so if we want a specific example, it is worth spending more time and money (visiting a workshop) so as not to have unforeseen problems with it.
When renting a used car, there are some other things to keep in mind, such as the amount of mandatory contributions in the case of OC and AC leasing policies, because although a used car is usually cheaper, its purchase and operation will always be in percentage. - in relation to the cost of the car - more expensive than leasing and operating a new car.
– The cost of leasing a used car is lower than a new car due to its cost, because a used car is usually cheaper than a new one. On the other hand, it is important for the lessor not to purchase overpriced equipment that is too cheap in relation to market value. You also have to factor in additional costs such as higher insurance, paid inspections, annual technical tests and repairs that are not covered by the used car warranty, warns Krzysztof Kot, Vehicle Market Manager at EFL Sales.
Depending on the company, different criteria apply regarding the age of the car and the own payment. Some landlords are reluctant to lease cars older than 4-5 years, and their own payment before receiving the car is, for example, 9 percent, but others are more flexible in the above matters.
– In the case of EFL, the total leasing period and the age of the car cannot exceed 7-8 years. It is unprofitable to rent a used car after this period, says Krzysztof Kot.
The financing period for used vehicle leases can be, for example, 6 to 48 months for a finance lease and 24 to 48 months for an operating lease. It may vary depending on the company.
In the case of a car worth PLN 35, 000% own contribution and a 5-month lease period, the monthly payment will be PLN 36 net. In the simulation above, the repayment amount is 976.5 percent.
In the option with a 10% own contribution and an annual lease term, the installment plan will be 1109.5 PLN net, and the car can be purchased for 19% of its value.
It should also be remembered that retrofitting a rented car, for example with a gas installation, always requires the consent of the owner of the vehicle, that is, the leasing company. The cost of the upgrade is fully covered by the tenant and the cost of such an installation cannot be included in the installment plan.
