Leasing or credit: what is more profitable?
The organization, which faces the need to purchase expensive assets, often at different addresses this issue. Try to understand what is really profitable for the company – to take a loan and immediately buy the necessary equipment or premises, or take it all in long-term lease may, with the right to repurchase.
► What is a loan?
Bank loan – earmarked funding is a credit institution of the borrower. Funds are granted for a purpose, such as for the purchase of an asset. Most credit facilities are secured, as in the case of the loan to a legal entity for the purchase of fixed assets it comes to large amounts.
Depending on the scheme, the repayment of the loan is either equal installments at regular intervals of time or at the end of one lump sum or unequal amounts at set intervals contract.
► What is leasing?
Leasing – a financial service, which is based in particular on the acquisition of loans by expensive fixed assets. This rent, installed for a long time, with the right to repurchase the leased property.
The leasing contract may be concluded on different terms.
• The lessor buys seller of the property, the lessee, for the subsequent renting it last. Seller and a specific model or type of property can choose himself the lessee and lessor.
• The contract can be for a period comparable to the useful life of the object. In this case, the end of the period the asset is close to zero, and the lessee receives no additional cost to the ownership of the object.
• The term of the contract may be considerably shorter than the useful life of the object. In this case, at the end of the contract period, the object can be transferred back to the lessor for the subsequent renting it or lessee may purchase the asset at its residual value.
• The leasing contract may contain provisions for the maintenance provided by the object, placing this responsibility or to the lessee or the lessor.
► leasing or credit: it is better and cheaper?
The unequivocal answer to this question, as a rule, no. To solve the dilemma you need to consider many factors: the size of the business, the company’s activity and even the overall economic situation in the country. More often than not, after all, experts are inclined to believe that leasing costs the company less than a loan.
Leasing accessible – leasing companies approach their customers with less stringent standards than credit institutions. To conclude the lease agreement is often possible without bail and all special strict requirements.
The leasing contract is concluded for a much longer period than the loan agreement. And the repayment scheme can be developed almost any – taking into account features of the company’s business, its seasonality and other factors. All this allows us to simplify the procedure of leasing payments.
When leasing company assumes no additional costs associated with the delivery of equipment, customs duties, insurance object. These costs assumes lessor. However, this argument is not always justified, because the company that provides equipment leasing, most likely, all additional expenses invested in your lease payments.
Another economic argument in favor of leasing – leasing obligations are not reflected on the meaning of the indicators characterizing the financial health of the company, as its balance sheet is formed only on the current debt payment.
Thus, in practice, often it turns out to be profitable leasing loan. However, each case should be considered separately, because each company – unique! Therefore, before the final selection, consult an experienced financier, which calculates the options and help you find the most convenient and best for your business.