Full Service Leasing vs. leasing
Main differences between Full Service Leasing and traditional financial or operating leasing without the package of car service.
| Full Service Leasing | Leasing | |
|---|---|---|
| Main objective of the Client | Mobility and the use of car | Financing the purchase and repayment in installments |
| Main parametres of the contract | Duration period and mileage (km) | Duration period |
| Initial fee | None or minimized | Yes |
| Repayment of capital | Repayment of the difference between the purchase price and the high residual value (at the level of market value) - smaller capital and monthly installment | Repayment of the whole value of the car with low residual value |
| Unchangeability of monthly installment | Yes | No or seldom |
| Facilitations for budgeting fleet costs | Yes – fixed monthly installment including financing, servicing, tyres, etc. | None or limited |
| Servicing | Full package of services in the fixed monthly installment: car checks and repairs, purchase and replacement of tyres | None, on the Client’s side |
| Additional services | Full package of services in the fixed monthly installment: purchase and registration, fleet administration, substitute car, assistance, insurance, damages liquidation, fuel cards, reporting | None (sometimes registration, insurance, others – rarely) |
| The car after the end of leasing | Returns to the lessor or is purchased at the market value | Purchase at the residual value |
| Residual value risk | On the lessor’s side | On the client’s side |
| Sale of car after the end of contract | The lessor assumes activities and risk | The Client deals with sale and bears the costs and risk |
| Invoicing | Two invoices (financing and integrated for servicing). Additionally fuel invoice. | Invoice for financing. Remaining invoices from a lot of service providers. |
| Changes of the contract | Possibility to change the period/ mileage in km of the contract | No possibility to change the period of the contract |
| Discounts | Discounts at the purchase of cars and maintenance services | None (servicing), or limited possibilities |
| Reporting | Report to the invoice, any managerial reports. Reports available online | None |
| Insurance and accident management | Full administration service and damages liquidation – relieving the user | None or limited |
| Burden to the balance sheet | Out-of-balance-sheet liabilities – non-disturbance of creditworthiness | Cars reported in the books (financial leasing) |
| Tax-deductible costs | Full installment as tax-deductible cost | Operating leasing – installment as tax-deductible cost Financial leasing – interest as tax-deductible cost |