Concept in Definition ABC

Leasing is a tool of financing that is used to finance investments long-term of fixed assets, understanding by fixed assets everything that allows a company to produce (for example, machinery or vehicles that intervene directly in the productivity of a business).

The leasing is carried out through a lease contract with a purchase option. Three parts are involved in a leasing operation. A part of the operation is carried out by the lessor (which could be a Bank), who buys at the request of the client and tenant a good for his personal use or professional.

Between the lessor and the tenant there is a leasing company that acts as an intermediary

In this way, the client pays a periodic fee for a certain time and in this sense is leasing an asset. When the lease ends, the client has the option of acquiring the property through the purchase option or can return the product.

The acquisition of an asset through leasing can be applied to real estate, trademarks, patents and, ultimately, any type of product can be obtained through a leasing contract. In most cases, the contracts that are made must be registered in some type of

record through a writing public.

Alternatives to get financing

If a company needs to incorporate new tools or renew its technology, it can resort to three different options:

1) pay in cash, but this circumstance is very unusual and, on the other hand, has the disadvantage that the money spent cannot be used for other needs (for example, acquisition of raw material),

2) request a bank loan to finance the acquisition of a good (for example, for a new industrial machinery), but this option It is not always valid since banks can deny credit or the bank loan does not cover all the needs of the company and

3) the alternative of leasing, a tool that can be useful for small and medium-sized companies.

Advantages of leasing

Some companies prefer to lease a vehicle rather than buy it because this option has a number of associated tax benefits. On the other hand, this form of financing has other advantages:

1) financing can be obtained for the entire investment,

2) improves the debt capacity of the company and

3) its processing is fast and the property acquired for rent can be converted into property.

Photos: Fotolia - Robert Kneschke / Tashatuvango

Topics in Leasing