Leasing or leasing is a type of financial operation in the medium or long term, consisting of a company (leasing company), owner of some goods, simultaneously assigning to another (lessee) its use for a certain period of time for a distributed price in periodic installments. At the end of the established term, the lessee has the possibility of acquiring the property (purchase option) for the stipulated residual value.
Definition of leasing or leasing
Financial leasing
In financial leasing, the applicant for a productive capital asset requests the leasing company to acquire said asset from the manufacturer or supplier and subsequently assign its use in the form of a lease with a purchase option. The economic purpose is to grant financing and is characterized in that it is concluded for a determined and irrevocable time, between the leasing company, which is an intermediary in circulation of the money, and the user, who needs to solve the acquisition of the good through a diverse mechanism of a common credit operation. (Sandoval, p.9)
Other types of leasing
According to the movable or immovable nature of the financed asset:
- Furniture leasing Real estate leasing.
According to the procedure used:
- Direct: the one in which the future lessee specifies to the leasing company the asset they need, and the latter proceeds to obtain it and finance it through the leasing contract Indirect: in this case the manufacturer or distributor company offers its asset to the company of Leasing, or the client company, once it has chosen the asset that it needs, goes to the leasing entity for financing.
According to the financial function
- Lease-back or retroleasing: one in which the company that needs monetary resources sells certain goods to a leasing entity, to automatically sign a leasing contract, setting a purchase option with which it can recover the goods at the end of the contract. International leasing: carried out between countries to finance the import or export of capital goods, transportation, etc.
Advantage
Among the main ones we can mention the following:
- 100% financing of the asset, which allows greater financing than credit, meaning a better use of working capital and an increase in borrowing capacity It allows the renewal of technology (machinery and equipment) in a more efficient way, fast and flexible Tax relief as it is accounted for as an operational cost.
Drawbacks
They stand out:
- Its irrevocable nature Its cost, its interest rates are generally higher than those of credits.
Bibliography
- Asscodes & Asmer International. Financial instruments of international trade. Confemetal Foundation. 1999.Escribano Ruiz, Gabriel. Financial management. Editorial Paraninfo, 2008. Haime Levy, Luis. The Financial Leasing. ISEF Fiscal Editions, 2003 Herrero Palomo, Julián. Administration, management and marketing in small business. Editorial Paraninfo, 2001. Horngren, Charles T.; Sundem, Gary L., and John A. Elliott. Introduction to financial accounting. Pearson Education, 2000. Ortúzar Solar, Antonio. The leasing contract. Editorial Jurídica de Chile, 1990, Sandoval López, Ricardo. Leasing operation. Editorial Jurídica de Chile, 1992.
