Contents and form of the lease agreement
In addition to the basic elements indispensable for every contract the financial lease agreement must contain the following elements:
- purchase cost of the lease asset – value at which the lessor acquired the title to the lease asset,
- total amount of the lease payment to be made by the lessee,
- the amount of a lease instalment and its composition, number of instalments and payment period,
- agreement period, place, deadline, manner and conditions of lease asset delivery,
- manner and conditions for conveying the title to the lease asset, and/or manner and conditions for extending the agreement period.
The financial lease agreement signed with the lessee – natural person (including entrepreneurs and farmers) must also contain the following information:
- gross purchase cost of the lease asset (the sum of purchase cost and calculated value added tax);
- the amount of downpayment (the amount paid by the lessee to the lessor disclosed relative to gross purchase cost of the lease asset);
- the amount of net financing (the difference between gross purchase cost of the lease asset and the downpayment);
- the remaining value of the lease asset (a portion of the amount of net financing for which the agreement stipulates lump sum payment, and not payment in instalments, after the expiry of the agreement period, if the right of the customer to purchase the lease asset is stipulated by the agreement);
- in the event of an FX-indexed lease – the information on the currency of indexation, including the note that the official middle exchange rate should be applied both in setting the amount of net financing and in setting the amount of each instalment of the lease payment;
- the level of the nominal annual interest rate, including the information on whether the rate is variable or fixed, and if variable, information on the elements for its determination (key policy rate, CPI and alike), their levels at the moment of agreement signing, the periods when they will vary and on the fixed element if agreed;
- effective interest rate and the total amount to be paid by the lessee, calculated on the day of agreement signing;
- obligation to insure the lease asset;
- conditions and manner of early repayment and the pertinent compensation level;
- interest calculation method (conform, proportional and alike);
- interest rate applied in the event of arrears;
- type and level of all the fees paid by the lessee, with the specification of whether they are fixed or variable, and if variable – the periods when the lessor will vary them, and the type and level of other expenses (taxes, fees to competent authorities and alike);
- types of collateral, possibility to replace them during the lease payment period and the conditions for their activation in the event of default;
- whether the right of the lessor to sell the lease asset has been envisaged;
- the conditions, procedure and consequences of the lease agreement termination, including the information on the conditions and manner of assignment of receivables in the event of default;
- the right of the customer to withdraw from the agreement, conditions and manner of withdrawal;
- the right to object and the possibility to initiate mediation procedure for the purpose of out-of-court dispute settlement;
- the address of the NBS as the lessor supervision authority.
The lease agreement must be in writing.
Lease payment is the consideration paid by the lessee to the lessor in exchange for using the lease asset. Its amount is determined based on the amount the lessor paid for acquiring the ownership over the lease asset, increased by interest and other expenses paid by the lessee to the lessor, in line with the lease agreement.
Annual effective interest rate discloses total expenses paid by the lessee under the lease agreement. These expenses are expressed as the percentage of the total amount of annual net financing.
When signing the lease agreement the lessor is obliged to submit a copy of the lease payment schedule to the lessee as well as the list of mandatory elements of the lease (contains basic information on the lease considered integral to the agreement) in addition to the agreement.
The contents of the overview of mandatory lease elements and lease payment schedule are defined in more detail in the Decision on Terms and Method of Calculating the Effective Interest Rate and on the Layout and Content of Forms Handed out to Consumers published on the NBS website.
BEFORE SIGNING THE FINANCIAL LEASE AGREEMENT THE LESSEE SHOULD CLOSELY EXAMINE ITS CONTENTS AND REQUIRE FROM THE LESSOR FUTHER EXPLANATION FOR ALL THE AGREEMENT PROVISIONS THAT ARE NOT ENTIRELY UNDERSTOOD.