FREQUENTLY ASKED QUESTIONS (FAQ)

What is Operative Leasing?

• When talking about operative leasing, the first thing to mention is that we are not talking about a purchase of a vehicle (as is the case with financial leasing), but more of a long-tern rental. The main idea is that the client rents the vehicle for a specific amount of time, and after this time passes – the vehicle is returned to the Lesser. For now this form of leasing is not that popular, because the Bulgarians are not used to living “on rent”. However, big companies trust on this kind of financing more and more, because of the financial benefits of such service.

What are the advantages of the operative leasing of Car Rental Kosovo

• Avoid having to pay the full cost of the vehicles up front, so you don’t use up your working capital or have to borrow
• Only pay for the vehicle over the fixed period of time that it is needed by you
• Easier to forecast cashflow as rates on monthly rental costs are fixed
• The cost can be more easily be planned to coincide with revenue coming into the business
• Reduce your tax bill by deducting the full cost of operation lease rentals from taxable income
• For companies that either do not pay tax or pay at the small company rate, the 100% tax allowances of operational lease rental are normally more beneficial than capital allowances for outright purchase options
• No need to worry about an overdraft or other loan being withdrawn at short notice due to changes in bank policy or personnel
• Maintenance and other asset management service items can be written into operating lease or contract hire contracts, and will be managed by Car Rental Kosovo
• The risk is carried by Car Rental Kosovo
• Car Rental Kosovo  can obtain better discounts due to our  greater purchasing power

What kind of leasing should we choose – operative or financial?

• When using financial leasing you engage yourself with the vehicle maintenance, human resources dedicated to this task and, in general, you make expenses which are not in the area of work for your company. Operative leasing is a form of financing, with which the lessee uses the item under rental conditions. Unlike financial leasing the option for acquiring the item after the rental period has passed is not available. May be the best description for the operative leasing is “a long-term rental”, in which the lessee is not becoming an owner of the leased item.

Why are we supposed to choose operative leasing, when we can buy the needed vehicles outright?

•  It allows your business capital to be used for projects which will hopefully help your business grow and make increased profits. Leasing lets you pay for your assets as they are being used by your business over time. There are also tax benefits which enable 100% of lease repayments to be written off against profits.

How are the monthly fees defined?

• The monthly fees depend on the price of the vehicle and the period of the leasing contract. VAT (18%) is added to the monthly fees.

Wouldn’t a bank loan or overdraft be better than operative leasing?

• A bank loan is a viable option but several issues must be considered
• If interest rates increase a bank loan may become more expensive.
• Bank loans reduce your available credit facilities thereby affecting future borrowing opportunities.
• From a tax perspective only the interest payable on the bank loan and the capital allowances are tax deductible
• With an overdraft or loan there is always a small possibility that the bank may decide to withdraw the facility during more difficult times of trading or that rates could rise in line with banking policy

Who pays the expenses for registration, marking, taxes of the vehicle and insurances?

• Usually those expenses are on the lessee’s account. They are not included in the monthly fees and must be paid additionally when they concur. There is an option, that the monthly fees are calculated so that they include them, but that’s not the default situation.

What if I need to upgrade my vehicle in the future?

• This point of interest will be agreed when the two parties sign the contract. You are able to exchange the used vehicle with one which better fits your needs, without making drastic change to your expenses.

What happens if I need to exchange my vehicle, because of a technical problem?

• Car Rental Kosovo gives you another vehicle to use, until the technical problem on yours is removed.

What kinds of guarantees are needed on my behalf, in order to sign a contract for operative leasing?

• Operative leasing of vehicles is characterized with a long-term rental. It’s a normal practice for the Lesser to require a deposit as a guarantee. The amount of the deposit can be calculated as a percent of the full vehicle price, or as a number of monthly fees. It is important to know, that this deposit is refundable after the end of the contract, if all the contract conditions have been fulfilled.

Can I sign the contract as a Private person?

• It is a worldwide practice, that the operative leasing of vehicles is intended to be used by both companies and Private persons. When the solvent is proven, every physical person can sign a contract for operative leasing, after being approved by the lesser.

Who will be paying the vehicle amortization expenses?

• The amortization expenses are calculated and included in the monthly fees. The calculation is based on normal amortization of the vehicle and the maintenance expenses for the rental period. All additional expenses which are result of an irregular usage of the vehicle are on the Lessee’s account 

Are the monthly fees acknowledged as a company expenses?

• Yes, the monthly fees are acknowledged as a company expenses at their full amount. Operative leasing gives opportunity for full accountant recognition of the fees, because they are acknowledged as a paid rental fees. Operative leasing is especially suitable for companies, which need a constant renewal of their vehicle fleet, without acquiring ownership of the vehicles. This presumes lower expenses in comparison with other financial alternatives.

What happens at the end of the contract period?

• At the end of the leasing period, the Lessee will be given an option for purchasing the vehicles at a nominal price.