What is leasing? This word can often be heard in the circle of people who have anything to do with finance or law. However, what is meant by this term?
In this article we will explain what the concept of "leasing" means, as well as in what areas it should be applied.
What is leasing in simple words
Leasing is a type of financial services, a form of lending for the purchase of fixed assets by enterprises and other goods by individuals and legal entities. It is worth noting that there are 2 main types of leasing.
- Operating leasing. This type of leasing means renting something. For example, you decide to rent a tractor for a couple of years. Then the equipment can be rented out or its lease can be extended. In some cases, the lessee can even buy back what he took as an operating lease.
- Financial leasing. This form of leasing is almost a loan. For example, there is a certain product (car, TV, table, clock) and sellers of this product. There is also a lessor - a person who buys the goods you need at the best price, as a result of which you will gradually transfer the payment for the goods not to the seller, but to the lessor.
Through leasing, companies or large entrepreneurs can purchase goods at a lower price than buying directly from the owner. This is due to the fact that wholesale discounts are provided to leasing organizations.
It should be noted that for an ordinary buyer, the acquisition of a relatively cheap product through leasing is unlikely to be profitable. However, if a person buys a car or other expensive item, then leasing may be beneficial to him.
Summing up all that has been said, we can conclude that leasing means a very convenient and, in some cases, a profitable instrument that allows you to buy something without having the full amount of money available.
