Leasing is a convenient and more and more often chosen by entrepreneurs way to finance a specific purchase. Usually, interested parties choose between operational and financial leasing. How are these two products different?

The essence of leasing is the transfer by the leasing company of the right to use a given item to the lessee. He undertakes to make monthly installments. Both forms of leasing can be used for new and used items.

Although the principle of operation of both leases is the same, they are two different forms of financing. We notice differences in financing when it comes to their profitability – it all depends on the lessee and the form of earning.

Financial leasing allows the user to make depreciation write-offs. Characteristic for this form of financing is the lack of the contractual duration established by law. After the end of the contract, the lessee immediately becomes the owner of the used item.

Operating lease, the lessor remains the owner of the object. The duration of the contract may not be less than 40% of the normative depreciation period. In practice, this means that the operating lease agreement for passenger cars, vans and trucks must last at least 24 months. After the end of the contract, the equipment can be purchased or left to a leasing company.

The differences between these types of leasing appear mainly in terms of taxation. At the same time, deciding about the advantage of one form of financing over the other. The choice depends on the subject of the contract. Goodfunds advisers will be happy to help you choose the lease.