Leasing

A lessor is a leasing company – it owns the leased asset. Lessors need to obtain Hanfa’s authorisation to carry out leasing activities. Finance lease activities may also be carried out by credit institutions with their registered offices in Croatia.

A lessee is a natural or legal person paying for the use of a leased asset. In general, the lessee chooses the leased asset from the vendor and contacts the leasing company for the purpose of financing this asset. 

A vendor is a legal or natural person selling a leased asset to the company.

Leasing services are usually used to finance passenger cars, commercial vehicles, machines, equipment, plant, property and vessels – leased assets. The owner of a leased assets is always a leasing company.

You will often come across the terms legal owner and economic owner of a leased asset. The legal owner of a leased asset is actually its real owner. The registration certificate of leased assets that need to be registered (such as vehicles) always provides the name of the lessor as the owner. Unlike the legal ownership, the economic ownership is a term related to the recording of the leased asset in company accounts. At the end of the lease term, the title of ownership of the leased asset is usually transferred to the lessee, while in an operating lease, the ownership remains with the lessor.

With respect to their characteristics, leases are classified into financial and operating leases, with the right of ownership being clearly distinguished from the right of use of the asset. This way, the lessee may consume benefits through the use of the asset without being subject to liabilities pertaining to its ownership.

In an operating lease, the lessor permits the lessee to use the leased asset for a period of time under the operating lease contract; at the end of the lease period, the lessee returns the asset to the lessor. The lessee is obliged to pay a fee for the use of the asset (which does not have to take account of the entire value of the asset) and does not get the option to buy the asset at the end of the agreement, but returns the asset to the lessor in the agreed condition. The risks and benefits linked to the ownership of the leased asset mostly remain with the lessor, without being transferred to the lessee.

In a finance lease, the lessor permits the use of an asset by the lessor under the finance lease contract for a period of a time, after which the lessee has an option to purchase the asset. The lessee is obliged to pay a fee for the use of the asset (which takes account of the entire value of the asset), bears depreciation expenses of the leased asset and has the option to purchase the asset and acquire ownership at a price lower than the real value of the asset at the moment of purchase. Almost all the risks and benefits linked to the ownership of the leased asset are transferred from the lessor to the lessee.

The lease contract obliges the lessor to purchase the leased asset from the vendor and to grant the lessee the right to use the asset for a period of time. In return, the lessee makes periodic payments to the lessor. Make sure to always read carefully the contract you are concluding with the lessor, as well as the accompanying general terms of business. The lease contract may be terminated by the leasing company upon failure of the lessee to pay two consecutive fees. In this case, the lessee must return the leased asset to the leasing company and settle all claims in accordance with contractual provisions. If you as a consumer are concluding the finance lease contract, your contract is also subject to the Consumer Credit Act, which regulates certain aspects of your contract in more detail (such as early repayment fee, pre-contractual information requirements, contents of the contract, etc.).

A lease contract may end in two ways: by regular expiry or early termination.

In the case of the regular expiry of the contract, the leasing company is obliged to submit to the lessee the final calculation under the contract and return to them the collateral and security, within 60 days following the day the lessee met all their liabilities (or, in the case of operating lease, following the day the lessee returned the leased asset in the agreed condition).

In the case of the early termination of the contract, the leasing company is obliged to indicate in the contract the time limit for submitting to the lessee the final calculation under the contract, clearly stating all the elements of the calculation, and to indicate the exact conditions allowing it to keep the collateral and security, and the time limits for returning the collateral to the lessee.