Leasing or financial leasing is the lease of a good entitled to purchase at the end of the contract.
Also, it can be called financial leasing, renting, financial leasing or operating leasing, and it is a contract between two parties by which one makes available to another a certain good in exchange for quotas (rents) agreed in advance for a certain time, and in which the lessee has the right to:
- acquire ownership of the good at a price set at the end of the contract,
- return the good and terminate the contract,
- or renew it by negotiating the new conditions.
For its part, the lessor makes available to the lessee a good of his property for which he will receive income for the usufruct of the same , having the obligation to sell the good at the end of the contract if the lessee exercised his right.
Companies, for example, use this system for two fundamental reasons:
- they do not need to make large investmentsin asset purchases, they can renew the assets periodically at the end of the contract (make another leasing contract with a new asset)
- and in addition, the lease is considered an expense(rent payments) so these costs can be deducted .
Leasing use and features
The use of this system has grown exponentially in society, due in large part to the fact that any person can access a good through a rental, which otherwise could not do so, due to the volume of the investment or the cost of maintenance.
This type of financial leasing is mainly used for leasing cars, buildings and production machines in some sectors. In this case, and unless otherwise agreed, all maintenance costs are borne by the lessor (owner) while the tenant must only pay the payment of an annual fee, incurring the owner in the good condition of the good , unforeseen services and costs.