Business asset leasing
With business leasing, you use a business asset, such as a car or a machine, without having to pay the purchase price in one go. Instead, you pay a fixed monthly amount to the leasing company. The arrangements regarding ownership, maintenance, and risks vary depending on the type of lease.
What is business asset leasing?
Business asset leasing means a leasing company finances a business asset, such as a lorry or a piece of equipment. Depending on the lease type, you either become the user or the leasing owner of the asset. In the lease contract, you record for how long you wish to use the asset. You can also set a term within which you will pay it off. You pay a fixed amount every month to the leasing company, instead of having to spend a lot of money in one go.
What types of business asset leasing can you choose from?
Businesses that want to lease assets can choose between:
1. Operational lease
With an operational lease, you use the asset, but the leasing company stays the owner. You agree on how long you will use the asset and the monthly payment amount. Extra services, such as maintenance, repairs, and insurance, are often available. You pay extra for these.
At the end of the lease term, the leasing company takes back the asset. They may also sell you the business asset for its current market value, or for a price agreed upon in advance.
2. Financial lease
With financial lease, you become the owner of the business asset. You repay the leasing company each month in instalments until the asset is paid off. In other words, a financial lease is like a loan from the leasing company.
Operational lease or financial lease?
With an operational lease, the lease firm stays the owner of the asset. So, the lease firm bears the risk of the asset losing value. That is why the costs are often higher.
With a financial lease, you bear the economic risk yourself. As a result, the costs are often lower than with an operational lease.
|
Operational lease |
Financial lease | |
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Costs are: |
higher |
lower |
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Risk born by: |
leasing company |
entrepreneur |
|
Convenience: |
more |
less |
Benefits of business asset leasing
The 3 main benefits of leasing:
- You do not have to make a large investment all at once. This means you will have money left over for other business expenses.
- Leasing companies usually know a lot about their assets and can provide good advice.
- Leasing can be combined with other forms of financing, such as a bank loan. Mixing different forms of financing is a good way to spread risk.