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Used Car Loans: Everything That You should Know

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What are private car loans? Are they similar to auto loans? The scenario looks similar. Even a slight delay in paying off other liabilities results in bad credit history. This is the most common reason for refusing a bank loan. Then loan companies enter the game, offering fast loans for indebted households. Such companies either do not verify Clients in the Credit Information Bureau or accept arrears in individual databases. Their offer is addressed to people who have:

– negative credit history

– low creditworthiness

– problems with paying off your liabilities

– court bailiff.

It needs to be clearly stated right away that indebted people have little chance of getting a loan from a bank. A negative credit history almost automatically means a refusal decision. The situation may change if an additional person with a good credit history and property plays the role of guarantor. However, each case should be approached individually.

And what about loan companies? There are dozens of offers on the market. Most of them also verify clients although they often advertise as “loans without verifications”.

Operational and financial leasing

Tax differences In the case of leasing, it is worthwhile to lean on the concept of amortization write-offs. The car over time is consumed, which means it loses its value. Therefore, when signing a leasing contract, it is worth determining the cost of consumption of a fixed asset. Thanks to depreciation, you can write off the amount of consumption in operating expenses. Leasing can be divided into operational and financial. Entrepreneurs more often opt for operational leasing due to the shorter duration of the contract and more favorable tax conditions. Operational leasing and VAT is the obligation to depreciate is left to the lessor.This is because the financing entity is the actual owner of the vehicle. However, the lessee may enter the number of installments (including VAT) into the costs of running a business. It is worth noting that the user has the right to purchase the vehicle after the end of the lease period. Financial leasing and VAT, However, financial leasing is characterized by the fact that the lessee is obliged to make depreciation write-offs. In this case, the car is entered in the list of lessee’s assets.  Therefore, the user can only enter the interest in installments to the tax deductible costs. What’s more, VAT is paid once, in full. At the end of the contract, the lessee becomes the owner of the vehicle. Leasing and tax deductible costs When the leased vehicle is used only for business purposes, the tax deductible costs (BUY) are 100%. VAT tax and installment amount. However, in the case when the vehicle is used for private purposes, the installment is 50% VAT. It is worth noting that the BUY is entirely included in the own contribution.

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