What is leasing: Another form of alternative financing

Many people wonder what is leasing and it is important to know this aspect. We give you keys about this leasing formula and its advantages

What is leasing: Nature and aspects to take into account

He leasing It is a form of financial leasing consisting of paying a fee for the use of a vehicle either team good for a certain period of time. The normal thing is that this use is not less than two years nor more than four.

The particularity of leasing, which differentiates it from other modalities, is that it is possible automatically acquire the asset when period ends. This is a contractual function that is usually of interest to the landlord and tenant. Now, we must indicate that this is only an option because the lessee can also return the property without further ado. In principle, the obligation ends with the termination of the contract.

Yes, it is true that legal regulation, through Law 26/1988, is aimed at the acquisition of the property. This alternative, unlike renting, is regulated and, unless previously revoked, it is understood that it is executed with the payment of the last installment. The operation is carried out with a financial entity and is clearly priced to avoid problems. They can only assume this function companies, unlike renting which is also for individuals.

Another aspect to highlight of the leasing is that this practice deducts taxes because it appears as lease. On the other hand, it contributes to balance accounting because it appears as a rental, not as a fixed asset. These are some of the reasons why many freelancers have opted for this formula.

Vehicle leasing

He vehicle leasing is the main alternative that is used. The idea is that the renter only has to worry about fuel during the rental period. The contracts They usually include the reviews and the corresponding maintenance. This results in cost savings.

Another advantage of purchasing the vehicle once the contract has ended is that you know what you have. This is a good option if what you want is to buy a second-hand car with guarantees. It is important to note that the residual value It has already been established in advance in the contract. 

Leasing of industrial machinery

He leasing is not used to the same extent in industrial machinery, but it is an option. This may apply to machines with a certain cost and that require maintenance. This is the reason why in some cases this alternative is chosen, especially in production chains. If the machinery works well, this is an interesting way to acquire the component.

Computer equipment

The Computer equipment They are another of the options that are contemplated in leasing. This is only useful when we refer to a high quality hardware and for medium-long-term use. Otherwise, you will be interested in other formulas.

financing beyond banking
 

Why might leasing be convenient?

He leasing It is an option that may be of interest in certain cases. Of course, you are interested in doing the following calculations to assess if it is the type of contract that interests you. In these cases, leasing could be an interesting possibility:

Avoid treasury tensions

If what you are looking for is to have the possibility of changing cars after two, three or four years, this is an option. You will not have to face the cash flow tensions derived from a purchase or request additional financing. Of course, you must keep in mind that this model implies that you will not have that associated equity either.

Financial deleveraging

One of the advantages of leasing is that it allows you deleverage yourself financially. If you do not have much resources, you will not have to face the application for a loan or line of credit. This is an option to keep your accounting balances balanced and not have problems in the medium term. If you want to buy an asset but do not want to have to bear large expenses, this is a possibility that will interest you.

Buy a car without a second payment

Renting contemplates the need to pay a residual value when the contract term ends. The main difference from leasing is that this becomes unnecessary because the share that you have been paying already included the taxes, the financing and the capital amortization. This is one of the reasons why leasing is an option that is usually of interest to self-employed people.

Conclusion

Know what is leasing It is convenient so that we do not have any problems when structuring expenses. Self-employed people and SMEs can ask themselves this question if they need certain goods for their function. This option, applied to company vehicles, is usually interesting for many companies for tax and cost-saving reasons. It is good that you consider the pros and cons of this formula for your business.

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