In this type of competition, the equipment is purchased by the financial institution which rents it to the company. If the financing ratio can reach 100%, which was one of the obvious advantages of leasing, in fact the requirement of an often significant first lease rent tends to replace more and more the self-financed contribution of the leasing company. business in a classic business loan.
The financial institution being the owner of the equipment, it can take back the equipment in the event of non-payment of the financial lease (rents), which should be a sufficient guarantee. But additional guarantees may be required depending on the size of the leasing, the risk of the activity, or even the excessive specificity of the equipment financed.
The comparison between the cost of a lease and a classic business loan is very difficult. It is particularly difficult to calculate the “cost rate” of a financial lease.
From an accounting point of view, the rents are deductible from the operating account.
Unlike classic business credit, debt does not appear on the liabilities side, but in the appendices of the tax package. At the end of the contract for a generally very small amount, the buyout by the company of the equipment ensures its ownership.
Alternatives to leasing:
- Rental with option to purchase (LOA)
- Long-term rental (LDD)
Other definitions of the lexicon starting with the letter C:
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