Leasing y renting

The leasing and renting are two options simiilares financing used very frequently consisting of long – term rent a good (vehicle, property, technological equipment, etc.).

In both cases, both in leasing and renting, the property to be rented is new and each of the options has different characteristics.

  Definition Operation in which it allows to rent a good by a company or a self-employed person but allows to buy it when the contract concludes. Operation in which it allows to rent a personal property to a company or individual where additional concepts are also included (insurance, taxes, etc.). There is no purchase operation at the end of the contract.
 Duration  2 to 6 years 1 to 5 years
 Who can Companies or freelancers Companies or individuals

What is leasing:

It is an operation similar to renting but with the option to buy the property when the contract is concluded. Usually the contract runs for two to six years. Leasing can only be used by companies.

Leasing features

  • Rental of an asset by a company or a self-employed person with an option to purchase.
  • When the contract ends, the owner can decide to buy the property by paying the residual value specified in the contract. Among other options, the owner can extend the contract or make another.
  • Duration of the lease: from 2 to 6 years.

Advantages of leasing

  • You can finance 100% of the investment. Leasing is a good option to renew machinery or car fleets through a monthly fee.
  • It is not a financial risk because the good has not been purchased.
  • Speed ​​and flexibility when it comes to changing the asset.
  • Tax advantages because it can be deducted as an expense.

Disadvantages of leasing

  • Higher financial cost.
  • If you want to cancel the contract, you must pay a penalty.
  • You own when the lease ended.
  • It does not include additional services such as insurance.

What is renting:

It is a similar long-term rental operation for companies or individuals that also include additional concepts such as circulation and registration taxes, insurance related to maintenance and assistance in the contract. The duration of a renting is between one to five years.

Renting characteristics

  • Rental of a personal property for a specified period of time with extras (usually a car or computer equipment)
  • When the contract is terminated there is no purchase option.
  • Higher payments than a lease
  • Duration of renting: from 1 to 5 years
  • Ideal for those who want to have new vehicles every certain period.
  • The holder can also choose to renew the contract under the same conditions.
  • The tenant can be a company or an individual.

With renting, many companies are favored with certain tax advantages. Renting can be used by individuals, although they are not favored in this case from a fiscal point of view.

Advantages of renting

The advantages of renting are:

  • You should not make a down payment or incur debt to use the personal property.
  • The tenant enjoys a new movable property and once the contract is fulfilled, the lessor will give him a new property under the same conditions.

Disadvantages of renting

  • The higher cost due to the re-regimen of leasing that includes other expenses and usually exceeds other modalities such as leasing.

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