Capital lease is the type of contract, under which the customer pays out the full cost of the object of lease making payments on the basis of the payment schedule, and after that he/she becomes the owner of the vehicle. Capital lease contract can also be entered into with residual value, in which case by the end of the period the car owner will have to pay a larger instalment, or, in other words, the residual value is the amount, by which monthly payments are reduced. It is reasonable to select capital lease if the customer wants to buy the car for himself/herself.

Operating lease is the type of contract, under which the customer makes payments in the amount of the purchase price until the residual value is reached. When the residual value is reached, we enter into the contract for repurchase of the vehicle. At the end of the leasing period the customer has several options:

1. To buy out the vehicle under the lease contract.
2. To return the vehicle to us or to a buyer.
3. To extend the lease contract so that the residual value would be paid back by making payments under the payment schedule within a certain period.

It is reasonable to choose operating lease if the customer wants to use the vehicle, but doesn’t want to be its owner.

Making payment by instalments is a type of contract, under which the customer pays out the full value of the object of the contract by making payments under the schedule, and after that he/she becomes the owner of the vehicle. The contract for making payments by instalments can also be entered into with residual value, in which case by the end of the period the car owner will have to pay a larger instalment, or, in other words, the residual value is the amount, by which monthly payments are reduced.

The type of contract you select depends on whether the price of the vehicle includes the turnover tax. If the car price includes the turnover tax, you should consider the options of capital lease and operating lease. If the car price doesn’t include the turnover tax, you can only select payment by instalments. In fact, for a private individual, it doesn’t make any difference what type of contract to enter into, since the terms and conditions are the same. However, companies should remember that in the event of capital lease, the turnover tax should be paid from the entire value of the vehicle.