FAQs
- FAQs
- Operating lease
| Finance Lease | Operating Lease | |
| 1. Similar | ||
| 1.1. Ownership of the leased assets | Ownership belongs to the lessor throughout the lease term | |
| 1.2. Right to use leased assets | Usage rights belong to the customer (lessee) | |
| 1.3. Beneficiary of insurance for leased assets | Lessor | |
| 1.4. Continue to lease | The lessee has the right to choose to continue to lease the leased assets after the initial lease term | |
| 2. Differences | ||
| 2.1. Nature of leasing | Provide medium and long-term credit | Ordinary leased assets |
| 2.2. Lease term | A length of the lease term equal to the majority of the asset’s useful life | Usually shorter than the useful life of the asset, which can be days, months, quarters, years or per product unit… |
| 2.3. Lease amount | includes principal debt (the money the lessor spends to buy the leased assets) and interest rate, which are clearly specified in each part of the lease contract. | is a certain amount of money paid periodically |
| 2.4. Record of leased assets in financial statements |
The lessee records financial leased assets as fixed assets/long-term assets of the lessee on the balance sheet. Lessor: recorded off-balance sheet |
Lessee: recorded off-balance sheet The lessor records operating lease assets as the lessor’s assets on the balance sheet. |
| 2.5. Depreciation on leased assets | The lessee depreciates the leased assets according to regulations of the Ministry of Finance similar to the case where the lessee purchases the asset itself. In case the lessee commits not to repurchase the asset at the time of signing the lease contract, the lessee is entitled to depreciate the leased asset over the lease term. | The lessor depreciates the leased assets. The lessee records operating expenses |
| 2.6. Risk to assets | The lessee bears all risks | The lessor bears all risks |
| 2.7. Maintenance, servicing, repair and insurance | The lessee bears all these costs | Depending on the agreement, the lessor bears all these costs |
| 2.8. Option to purchase the leased asset after the end of the lease contract | The lessee has the priority right to choose to buy back the leased asset after the lease term at a nominal value, much lower than the original asset value. | The lessee does not have the priority right to choose to buy back the leased asset after the lease term. In case the lessee wants to buy back the leased asset, the lessor and the lessee will negotiate the liquidation price of the asset at the market price. |
Insurance for leased assets is required throughout the lease term. Depending on the type of leased assets, BSL and the lessee will agree on the type of insurance to purchase. The lessee will bear the insurance costs for the leased assets, and the insurance beneficiary is BSL. The lessee can purchase insurance for the leased assets and pay the insurance fee by themselves, or BSL can finance this insurance fee, depending on the lessee’s needs.
Down payment is a part of amount of the assetss’s value which customer pays before the lease contract. There are normally 2 ways of making down payment, subject to the terms and conditions in the lease contract:
1st Option: Pay to the supplier this down payment
2nd Option: Pay to BSL
Depending on the type of the assets, BSL will decide the ratio of down payment. It may be from 0% of the assets’ value.
Can be up to 100% of the assets value (including costs such as registration fees, maintenance, insurance, etc.) depending on the type of assets and credit rating of the lessee.
Customer can record finance lease interest and leased assets depreciation as the deductible operating expenses of their compnay according to the provisions of Article 9 of Circular 45/2013/TT-BTC dated April 25, 2013 of the Ministry of Finance guiding the management, use and depreciation of fixed assets.
VAT of finance lease rent is deductible as regulated by law according to the provisions of Circular 219/2013/TT-BTC guiding the implementation of the Law on Value Added Tax
“The lessee does not have to pay registration fees.
Pursuant: At Point 12, Article 9 of Decree No. 140/2016/ND-CP dated October 10, 2016 on registration fees “”12. If ownership of a financial leased assets is transferred to the lessee at the end of the lease term through the transfer or sale of the leased assets, the lessee is exempted from paying registration fees. “
The lessee can change the place to use the assets, however, it is necessary to inform BSL in advance by writing and get the written consent from our company.
Please contact our salesman or hotline mail/ telephone and related insurance company in case there arise accidents to the leased assets.