The shamrock theory, or personnel leasing

Personnel leasing

The response of business to the trend of rising labor costs was the emergence of new organizations, which Charles Handy defined as trefoil organizations.
Trefoil is a way to make the most efficient use of human capital. The first sheet, according to Handy, is the main employees of the new organization. All of them are professionals, technical specialists, highly qualified workers and managers, absolutely necessary for the future of the organization, since they are the bearers of the knowledge that distinguishes this organization from all others. They have high earnings (in Russian conditions - thousands of dollars a month) and additional benefits.

Often the incentives for these employees are based on sharing in profits, ownership and management. The corporation assumes that such employees will work 70 hours a week and devote themselves completely to work. Their goal is a career and advancement through the ranks.

Professionals are few in number, extremely valuable, and well paid, although a significant portion of that pay (perhaps as much as 40%) is contingent on group and/or company performance. The permanent base of the organization is small and needs help, hence the second shamrock.

The second sheet is external contractors. These are consultants, contractors and other professionals hired from outside to work on specific projects, or for work that is not of critical importance to the organization (i.e., not part of the expertise of the core staff), or to perform routine duties, which professionals do not want to take on. Often these people work on a staff leasing basis.

This category also includes employees of other companies, contract professionals or technical specialists. Often these are former permanent employees of the company with whom it now maintains contractual relations.

They are paid based on their performance rather than the time spent achieving those results, and the organization has little control over their day-to-day activities. Handy notes that managers are tempted to exploit such workers by paying them minimal rewards for maximum workload, and recommends that companies avoid this.

The third sheet is for temporary and part-time workers. This shamrock leaf, according to Handy, represents the flexible portion of a company's workforce—the workers brought in to keep the plant running 24/7 or to handle peak workloads. “Roughly speaking,” writes Handy, “they form a labor market into which employers enter as needed and when they wish, paying these people as little as possible.”

Some workers in this category want to get out of this situation as quickly as possible and find permanent work - either as full-time employees or full-time contract workers. Others just want to make extra money. Some of them work for several hours in several places and earn their living this way. Some use this opportunity as a kind of apprenticeship in preparation for a future permanent job.

Handy notes that the majority of the flexible workforce never seems to display the drive and/or ambition of full-time professionals, but, our guru argues, a lot depends on how they are treated: “If These people are treated as casual labor and respond to this treatment with negligence. If a flexible workforce is to become a valuable part of an organization, then the organization must be willing to invest in these workers and provide them with training, even training that will enable them to obtain the qualifications needed to find employment in other companies. Such workers should be given some status and certain benefits (including paid holidays and the right to sick pay). Then, and only then, will the organization receive the help it needs and the level it requires from temporary and part-time workers.”

The combination of two ideas - the trefoil theory with the theory of human capital (which changed views on the creation and reproduction of human resources, as well as their role in the production process) - is practically implemented in the form of personnel leasing.

More than 1% of the total number of employed people in the USA and Western European countries are employed by recruitment agencies-lessors. Every year, the number of international companies specializing in personnel leasing increases by 1.5 times, and their total turnover today exceeds $60 billion per year.

PERSONNEL LEASING IN MODERN CONDITIONS

In modern economic development conditions, an increasing number of enterprises are using new human resource management technologies to optimize personnel costs. The concepts of “staff leasing”, the use of “temporary personnel”, “agency labor”, “outsourcing” and “outstaffing” have become non-traditional for the Russian labor market.

These forms of work carried out by a third-party organization are widely used in Western Europe and the USA, but Russian legislation has not paid due attention to this issue for a long time. However, in modern conditions, Russian companies have increasingly begun to turn to agency labor technology. Personnel leasing is used by organizations in various industries: manufacturing, retail chains, banks, etc. The projected growth of this service sector in Russia is associated, first of all, with the growing awareness of organizations about the possibility of using such business schemes.

A new article 56.1 has been introduced into the Labor Code of the Russian Federation. prohibits agency work, but at the same time the new chapter 53.1. The Labor Code of the Russian Federation provides the main features of regulating the labor of workers sent temporarily by the employer to other individuals or legal entities under an agreement on the provision of personnel labor. The relevance of the provisions of this chapter is due to the fact that some employers avoid concluding an employment contract by using agency labor mechanisms. Federal Law dated 05.05.2014 N 116-FZ “On Amendments to Certain Legislative Acts of the Russian Federation” was introduced specifically for the purpose of introducing changes to prevent employers from evading the conclusion of employment contracts through the unreasonable conclusion of civil contracts, the use of agency labor mechanisms or other ways.

Previously, agency labor was not regulated by law. Now there is a clear understanding that this is work carried out by order of the employer in the interests of another organization and under its leadership, which is prohibited in current conditions. This provision mainly affects the use of outstaffing and personnel leasing.

Outstaffing refers to a form of agency labor in which the user organization removes part of its personnel from its staff and transfers them to a recruitment agency; it is this form of provision of personnel that is subject to serious restrictions.

Personnel leasing is a legal relationship that arises when an agency enters into an employment contract with an employee on its own behalf and sends him to work for another company for a relatively long period.

The selection of temporary staff is used for short-term projects or work and this is associated with the hiring of administrative or service personnel during marketing research, conferences, during illness or vacation of regular employees.

The most promising form of using labor and organizing labor is personnel leasing. Leasing, or rental, of personnel are conventional concepts for labor law, which are borrowed from civil law in the search for effective forms of personnel management based on the experience of foreign companies. In turn, personnel leasing is considered as the implementation of functions by the personnel of another organization on the basis of a personnel supply agreement. At first glance, it may seem that these forms of providing personnel fall under the definition of agency labor, since the provided workers ultimately perform certain labor functions in the interests of another person and under his control.

But the most important difference is that in a contract or service agreement, the main goal is to obtain a specific result from the employees’ activities, while agency labor involves preserving the immediate labor function. That is, the usual removal of employees from the staff and the reverse “lease” of personnel has no real purpose of building relations between the employer and the employee, and these actions on the part of the employer are prohibited.

The prohibition of agency labor has nothing to do with such forms of functions performed by third-party organizations as outsourcing, consulting and contracting. The law applies to the work of employees in the company who are employees of a third-party organization, but other than the removal of employees from the staff, no economic goals are pursued. Personnel leasing, which is a type of outsourcing, has other goals and its action is regulated by the newly adopted chapter of the Labor Code of the Russian Federation, which establishes relations for the provision of labor to employees (Chapter 53.1 of the Labor Code of the Russian Federation).

In accordance with the newly introduced Art. 341.1 a private employment agency or other legal entity that has the right to carry out activities in providing labor to workers (personnel) has the right to temporarily send its workers to an individual or legal entity that is not the employer of these workers (to the receiving party), for the workers to perform certain of their labor contracts of labor functions in the interests, under the management and control of the specified individual or legal entity. However, this is possible only with the written consent of employees who will be sent to work for another legal entity or individual.

The types of organizations that have the ability to leasing personnel have been established - these are organizations that are registered as a private employment agency, accredited or affiliated companies. The procedure for sending employees to work, terms of recruitment (up to 9 months), cases and types of work when such employees cannot be used, etc. have also been regulated. Requirements and restrictions have been established for professional agencies, such as the impossibility of applying special tax regimes, the authorized capital must be at least one million rubles, mandatory accreditation or the fact of affiliation.

In addition, the law introduces subsidiary liability of organizations that hire and actually use labor in case of failure to fulfill obligations to the employee. This provision reduces the number of companies involved in personnel leasing, and improves the situation of workers and their social guarantees.

The need to use personnel leasing is justified by modern business needs. Depending on the direction of development and the scale of organizations, management faces the choice of investing in training its own personnel, outsourcing some of the functions, or using the temporary provision of personnel by a professional agency, thereby minimizing the costs of maintaining its own staff and the risks associated with management staff.

The main advantage of this form of providing workers is obtaining the necessary personnel in a short time in a certain quantity and the required qualifications. It becomes possible for organizations to quickly respond to changes in market conditions by increasing or reducing the labor of hired personnel.

Positive aspects of companies using personnel leasing can be considered a reduction in the volume of personnel records, reduction in losses and downtime. The organization has the opportunity to select the best specialists and hire them into its own staff, thereby improving its personnel composition, as well as enhancing its image.

However, a significant disadvantage of personnel leasing is the decrease in employee loyalty to the employer, since the employee can pursue his own goals, be it gaining experience in a large company, temporary work, or searching for a permanent job with subsequent transfer to the main staff of the organization. Also, due to the tightening of the conditions for the provision of personnel and the requirements for improving the situation of workers and their social security, an increased cost of recruitment agency services is being established.

Personnel leasing, as a type of outsourcing, allows you to significantly reduce the costs of the customer organization, make them fixed and predictable, focus on the core business, and also avoid increasing the number of employees and reduce all kinds of risks.

It is much more profitable for organizations to use personnel leasing to solve certain specific operational tasks or use the services of a third-party organization on an ongoing basis. Personnel leasing allows, to a certain extent, to increase the competitiveness of enterprises and increase production efficiency as a result of reduced labor costs

Currently, this is the best option for an organization that is not ready to expand its staff, but is in need of additional employees or performing certain work.

Bibliography

1. “Labor Code of the Russian Federation” dated December 30, 2001 N 197-FZ (as amended on December 30, 2015)

2. Federal Law of 05/05/2014 N 116-FZ “On Amendments to Certain Legislative Acts of the Russian Federation” // “Rossiyskaya Gazeta”, N 101, 05/07/2014.

4. https://www.taxcoach.ru/about/news/Autsorsing_personala-_zapret_ili_legalizatsiya-/ (accessed March 21, 2016)

5. Apenko S.N., Svetikova G.S. “Economic justification for the use of “borrowed” personnel in modern enterprises” Bulletin of Omsk University, Series “Economics”. 2015 No. 5. p. 64-72.

Discrepancy between available labor resources and the need for them

Personnel leasing initially arose due to a discrepancy between the availability of labor resources and the need for them, due to the need of organizations for diverse specialists for different periods.
To solve this problem, it is necessary to develop a program for changing the qualitative and quantitative parameters of the enterprise’s labor resources. This program may involve meeting the needs for personnel through additional training, hiring specialists of a certain profile, or through personnel leasing. But then personnel leasing began to be increasingly used to reduce personnel costs within the framework of the shamrock theory.

Leasing relations in the field of personnel management are resorted to when it is necessary to attract highly qualified specialists. If the need for them is not constant, and the scope of their activity is within the framework of accounting, auditing, jurisprudence and other areas of knowledge in which specialized companies operate, then they most often resort to the help of such specialists.

Finally, the leasing scheme is used if the company wants to minimize its tax losses when calculating the so-called wage fund and simplify the procedure for relations with external specialists.

Thus, many companies cannot use classical forms of hiring and motivating employees due to the fact that they are faced with three main problems: company policy aimed at stopping the development of new priority areas; high turnover of highly qualified personnel due to changes in the company's compensation policy; reduction of staff and budgetary personnel costs by the company's head offices while maintaining the need for the labor of relevant specialists. In such a situation, it becomes necessary to attract specialists temporarily, under different terms of employment.

There are two types of services in the field of personnel leasing - provision of temporary use of individual specialists and formation of the organization's staff.

By analogy with physical capital, the first type of leasing can be compared with operating lease, since operating leasing of employees, as a rule, is short-term in nature. When using the second type of leasing, there is often a transfer of leased employees to the organization’s own staff.

In Russia, leasing of office personnel, sales department personnel, technical personnel and workers is most common.

What is personnel leasing

This phenomenon has nothing to do with the usual temporary registration under a fixed-term employment contract. An employee who independently enters into a trade agreement with an enterprise cannot be the subject or object of leasing (more details here) - he participates in completely different relationships that arise between him and the employer.

Personnel leasing is a form of cooperation between two business entities, in which one of them entrusts its full-time employee with performing work at another enterprise for a certain period of time.

The lessor can be a specialized recruitment agency or another company that has entered into an agreement with the counterparty to the appropriate content.

When and why it is used

Most Russian companies are wary of temporary employees. Each company has its own trade secrets, which management does not want to reveal to strangers. However, situations arise in which it is impossible to do without attracting external workers. For example:

• Short-term projects that require the participation of specialists who are not in the current staffing table. A company can receive a very profitable order that does not quite correspond to its main profile. This situation can be illustrated using the example of an aircraft factory, which is required to produce some specific component for a spacecraft. The main design documentation can be developed by our own engineers, but the designs of satellites and rockets have features that require the involvement of temporary qualified consultants.
• Temporary staff shortage. This happens during certain seasons or when organizing some special promotions. During a conference, exhibition or peak influx of tourists (especially in resort towns), the need for labor resources increases. In such cases, leasing of ordinary and administrative personnel is practiced, making up for the personnel shortage.
• The need to reduce the official number of personnel. The desire not to go beyond certain parameters that allow maintaining a favorable tax regime encourages the managers of some enterprises to resort to tricks: transfer their employees to the staff of other companies (affiliated or intermediary), and then “lease” them. At the same time, people actually continue to work as before, in their places.

As a result of this cooperation, the lessee company enjoys the following advantages:

• reduced number of personnel without loss of production capacity;
• the ability to implement various projects using temporary workers who are not registered as staff;
• simplification and reduction in cost of office work and accounting;
• reducing the financial burden of paying taxes and social obligations provided for by the legislation of the Russian Federation.

Functions of a recruitment agency engaged in personnel leasing:

• accepting employees into your staff under an employment contract with all the ensuing legal consequences;
• wages and tax deductions on wages;
• compliance with legislative requirements for social guarantees;
• compulsory health insurance;
• provision of certificates from the place of employment;
• interaction with employment agencies;
• documentary and other support for the production and labor activities of its employees, regardless of their actual place of work.

The legislative framework

In 2021, Federal Law 116-FZ came into force, regulating relations arising in the process of providing (leasing) temporary personnel. Its main provisions that you need to know about:

• Only companies accredited by the employment service and operating under the basic tax system (not the simplified tax system) can provide the service.
• The duration of the employee employment contract on a leasing basis cannot exceed nine months.
• The work of such an employee is paid according to the tariffs adopted at the lessee enterprise for the main personnel.
• In harmful and dangerous industries, compensation stipulated by law must be paid.

Federal Law 116-FZ is aimed at protecting the rights of employees performing labor duties under leasing conditions. In particular, they are prohibited from being involved in production of the third and fourth degree of harm.

The legal norm establishes the following restrictions:

• leasing agencies in the bankruptcy stage are deprived of the right to carry out activities;
• hired workers employed at other enterprises cannot be part of the crews of sea and river transport vessels;
• the use of leasing during strikes (as strikebreakers) or production downtime is prohibited;
• leasing operations with personnel cannot be carried out if there are free or not fully loaded own personnel;
• attracting third-party labor resources is unacceptable if it is obvious that such an action could lead to the forced dismissal of full-time employees.

Identification of non-compliance with the restrictions and prohibitions established by Law 116-FZ serves as the basis for the adoption of administrative sanctions against the enterprise as provided for by the Labor Code of the Russian Federation.

Formation of leasing staff

Let's consider the scheme for forming a leasing staff by a recruitment agency-lessor.
Step 1. The lessor selects specialists according to the requirements of the lessee. Domestic recruitment agencies work mainly under orders from leasing specialists, while foreign recruitment agencies create a staff of leasing employees in accordance with market needs, regardless of the availability of a specific order at the moment.

Since leasing specialists may have access to confidential information and will be leased to various organizations in the future, they are selected using special methods that involve detailed verification. Abroad, recruitment agencies have special security services that conduct such checks. For candidates, the acceptability of such an unusual form of employment and the compliance of leasing work with their personal career plan are very important.

Step 2. After agreeing on the candidates with the lessee (or the lessor, if the staff is being formed for the future), specialists are accepted into the lessor’s staff and become permanent, full-fledged employees of the recruitment agency. The agency introduces new employees to the employment contract and the code of ethics of the leasing specialist.

Step 3. Specialists are provided to the lessee to perform the agreed functions within the agreed period.

The following is a diagram of interaction between the lessor and the lessee to meet the temporary need for personnel through leasing relationships.

Stage 1. Determination of the problem situation of the lessee and the specific need for labor (qualifications of specialists, their composition and terms of use).

Stage 2. Selection by the lessee of a specific leasing scheme option. An agreement is being negotiated that defines the terms of leasing, the salary of specialists, as well as the agency’s commission (20-30% of a specialist’s salary). One of the most important points of the leasing agreement is the volume and evaluation criteria of the work that must be completed by a specialist within a specified time frame. The recruitment agency guarantees the lessee the quality of work performed, as well as the non-dissemination of any business information received by the specialist during his work in the organization.

Stage 3. Selection of personnel for leasing, if necessary. When personnel are provided from the already formed leasing staff of a recruitment agency, there is no such need. In rare cases associated with formal layoffs, existing personnel are transferred from the lessee's staff to the lessor's staff, and then the lessor returns the same specialists to the lessee under contractual leasing relations.

Stage 4. Documentation by the lessor of tripartite leasing relations with the lessee and specialists.

Stage 5. Control by the recruitment agency over the amount of work performed by the specialist. The agency ensures that the lessee's specialist performs only work that corresponds to his qualifications and in the volumes stipulated by the leasing contract. Conflicts and labor disputes that arise between the lessee and the hired employee are resolved by the recruitment agency.

Legalization of personnel leasing

According to current Russian legislation, agency labor is prohibited in our country. But there is an exception to every rule. Thus, the government adopted a law allowing personnel leasing in two separate cases:

1. If the leasing company provides hired specialists in accordance with the terms of the shareholder agreement.
2. If a recruitment agency registers and receives accreditation from a private employment center.

If we talk about restrictions, then there are several times more of them. Thus, leasing services cannot be used if:

1. Shortage of workers on river and sea vessels and hazardous production.
2. The presence of labor conflicts with full-time employees of the enterprise.
3. The customer's intention to rent personnel for too long a period.
4. Possible reduction of permanent employees.

Personnel leasing in Russia

Abroad, recruitment agencies are not limited to recruiting ready-made specialists to the leasing staff, but are cultivating their own leasing potential.
Such agencies select talented young people, invest in them in order to eventually lease highly professional specialists to companies that need them. The development of personnel leasing in Russia is hampered by the imperfection of the legislative framework, the opacity of the vast majority of companies, as well as the instability of demand for highly qualified specialists, subject to their temporary involvement.

Russian labor legislation does not provide for leasing relations in the field of hiring labor. Thus, the problems are the settlement of issues of industrial injuries by leasing specialists in the performance of official duties, as well as their use of inventory items.

But despite all the difficulties, there is a good future for personnel leasing in Russia, since it will allow many companies to take a balanced approach to resolving the issue of optimal use of personnel in the organization’s activities.

About the development of this service in Russia

After the country emerged from the 1998 crisis, it became too expensive for most organizations to maintain people on their staff. In those days, many of those who worked at the enterprise permanently were sent on leave without pay. In their place, people from among the unemployed were hired. What is the reason for this phenomenon? Employers have discovered that it is not necessary to hire a lot of staff to generate income from their businesses. Entrepreneurs have realized how convenient personnel leasing is. Although at that time this term was not yet known.

Already by 2001, the number of companies that use leasing personnel in their business was almost half (40%) of the total number of clients of recruiting organizations.

Personnel leasing is developing in Russia, but very slowly. The following factors slow it down:

• poorly designed legislation;
• lack of financial transparency among the majority of companies;
• lack of demand for highly qualified specialists, especially on a temporary basis.

Advantages and disadvantages of personnel leasing

Leasing has certain advantages.

1. Reducing administrative and time costs for conducting personnel records, accounting, reporting, etc.
2. Recruitment of the necessary personnel in a short time in any volume.
3. Reduced costs for compensation packages that are not provided for temporary employees or are minimal.
4. Possibility to change employees an unlimited number of times.
5. Opportunity to hire the employee you like permanently.
6. No losses or downtime in case of illness of the main employee.
7. Reducing the costs of temporarily hiring highly qualified specialists.
8. Other advantages depending on the specific form of the leasing scheme.

Leasing also provides certain advantages to employees: a stable position for leasing employees (continuity of service, payment for vacations, sick leave, recreational activities, etc.);
constant loading; opportunities for students; the opportunity to find a job (statistically, 10% receive a permanent job offer). The disadvantages of leasing include the following properties:

1. Expensive compared to full-time staff. The fee for the services of a recruitment agency is usually 12-18% of the amount of the wage fund and the unified social tax. In addition, VAT is charged on the entire amount.
2. Possible disloyalty of employees to the company.

What is personnel leasing

Protection of the rights of employees performing labor duties under leasing conditions is carried out on the basis of Federal Law 116-FZ.
Article navigation

• What is personnel leasing
• When and why it is used
• The legislative framework
• Differences between personnel leasing and outsourcing and outstaffing
• What is outsourcing
• Outstaffing
• Brief conclusions

Labor resources serve as a source of profit, and therefore are an asset of any enterprise. Is it possible to hire or lease workers? The question seems strange, but only at first glance. Personnel leasing is becoming increasingly popular around the world. It and the features of “providing temporary employees” in domestic conditions will be discussed in the article.

Personnel leasing: advantages and disadvantages

Work to reduce costs can be carried out in different areas of the company's activities. This article will highlight modernization in the field of human resources of an organization, talk about an interesting method of recruiting and hiring employees, which is called “Personnel Leasing,” as well as the advantages and disadvantages of this method.

Personnel leasing in Russia has been developing rapidly over the past 10 years. The experience of domestic companies was mainly based on foreign practice, but, like everything Russian, it acquired its own exceptional characteristics in our country. More and more companies are using this cost-saving method to reduce costs - hiring employees through leasing companies.

In essence, leasing personnel is a service in which an agreement is concluded between two companies that employees of one organization will temporarily (or during the project) work for the second organization. It is important to note that when hiring personnel on lease, the costs of wages, sick leave, employee vacations, and maternity leave are paid by the company that provides this personnel. Moreover, if the leased employee for some reason is not suitable for the organization, then his replacement will take place quickly, which is confirmed by the contract. This replacement does not in any way affect the increase in personnel costs and is not paid additionally. This is the most important advantage of this method.

Along with these advantages, there are several other main advantages of this service:

• reduction in the number of employees on staff;

• the opportunity to reduce administrative and financial liability;

• removal of obligations from the company regarding labor obligations with the employee;

• ensuring flexibility in employee management.

Without minuses there are no pluses

Leasing staff can have consequences. Not all companies providing this service care about training and testing their staff. That is why concluding an agreement between organizations is so important. Reliable companies must have a so-called security service. This department is required to screen applicants. It is important that they do not have a criminal record, and that their state of health allows them to engage in certain types of work. In addition, one of the disadvantages is the lack of a definition of outsourcing in the law, as well as the lack of a strategy for regulating its processes. To avoid and eliminate this disadvantage, an agreement is concluded between the parties. This event is directly responsible for eliminating any risks in the interaction between the parties.

Material provided by one of the leaders in the personnel leasing market in Moscow and St. Petersburg. "Area Job" began its activities in 2009 providing services: rental, leasing, personnel outsourcing. The company provides qualified employees for various fields of activity (food and industrial production, trade, logistics).

Leasing for individuals

Leasing for individuals is practically no different from a similar service for organizations. By signing a leasing agreement, the client actually takes a vehicle or other property for a long-term lease. At the same time, the agreement also provides for the lessee’s right to purchase the leased asset at the residual value upon expiration of the contract.

Until 2010, leasing in Russia was not available to individuals. But at present, such an opportunity is still provided, although not all companies provide such services. Individuals have access only to leasing vehicles and sometimes real estate.

Advantages of leasing

Leasing does not provide tax benefits for private clients. However, certain advantages of leasing for individuals still exist, and you need to know them.

Here are the main positive aspects associated with leasing services for individuals. persons:

• Simplified design. A leasing agreement may include both the use of the property itself and additional services: from insurance of the leased item to tire service. The deal for individuals is agreed upon quite quickly - within 1 day maximum.
• Increased chances of deal approval. The risks of a leasing company are lower than those of banks. After all, the leased item is its property until the final redemption. Due to this, lessors often approve the application of those clients who have been refused by the bank.
• Opportunity to receive a discount from the manufacturer or dealer. Leasing companies are actively working to conclude partnership agreements. As a result, their customers can purchase cars or other property at discounted prices.

A certain category of leasing clients is also attracted by the fact that until the car is fully purchased, the leasing company is its owner.

It is usually not easy for individuals to come to terms with this state of affairs, but for certain categories of government employees this is the only way to get the necessary property for use without registering it in their name and without violating the law.

Disadvantages of leasing

The main disadvantage of leasing for individuals is the need to strictly comply with all the terms of the agreement, especially in terms of making payments. If the bank only charges a penalty for a late payment by 20-30 days, then the leasing company can in this situation declare termination of the contract. In this case, the leased item will be confiscated from the lessee, and payments already made will not be refunded.

Additionally, you should also pay attention to the following disadvantages of leasing for individuals:

• Difficulties with early payment. The loan can always be repaid ahead of schedule and interest recalculated. Under a leasing agreement, the client will be able to pay before the due date with recalculation of the overpayment only with the permission of the lessor. Often such actions will result in a fine or additional commission.
• Quite high stakes. For individuals, they can reach 12 - 18% per annum, which is comparable to consumer loans.
• Prohibitions and restrictions. You can rent out purchased property only with the permission of the lessor, and obtaining it is quite difficult. Cars received under a leasing agreement are often subject to restrictions on mileage, operating territory, etc. Any violation of the agreement with the leasing company will again lead to a minimum fine, and a maximum to termination of the contract and confiscation of the leased item.

Is leasing profitable for individuals?

Leasing for individuals is often used by clients who, for some reason, cannot obtain a bank loan. This is usually due to the inability to officially confirm income or the presence of special restrictions from the law.

Only with a responsible approach to choosing a lessor will a private individual be able to obtain leasing on truly favorable terms. But even in this case, you need to pay attention to analyzing your own financial capabilities. After all, if you are late, you can easily lose both property and money.