What is the difference between leasing operational from the financial?

Leasing is a special type of contractual relations, is available in several varieties. Prevalent such types of leasing as operational and financial. What are the specifics of data types? What is the difference between leasing operational from the financial?

The content of the article

What is leasing?

Under operational leasing refers to the in which the costs of the lessor are not to be compensated under a separate contract. The agreement between the partners is relatively a short period — about 2 years, during which it is unlikely the significant deterioration of the transferred assets. But lease rates are quite high (in case the object will still be much worn). In the interest of the lessor is to retain its functionality in order to transfer in the following leasing contracts. The object, therefore, often remains the property of the owner.

Operational leasing implies that the lessor’s competencies regarding the analysis of demand different types of equipment. In stock it should be only those objects, which will be a regular demand — otherwise they will be idle.

Operating leasing is popular in all business segments. Parties to the relevant contracts be small, medium, large enterprises, due to the relative availability of the acquisition to use the property according to the scheme in question, as well as the risks to ensure the functionality of equipment are the responsibility of the lessor.

to contents ↑What is financial leasing?

Under financial leasing is understood, which covers the financial transactions of the entire amortized cost of equipment used. In fact, the recipient of property by lease your partner pays the full cost of the relevant infrastructure. This mechanism of financial relations characteristic of large-scale transactions and is implemented, usually with the participation of specialized financial-credit institutions. In the framework of financial leasing is usually the transfer of the object to the property of the lessee upon the performance of its obligations under the contract.

The competence of the lessor in this case would be not only in the analysis of demand different types of equipment, but also in determining the level of solvency of target customers. Small and medium-sized businesses are not too often practice the conclusion of contracts according to the scheme of financial leasing. But even if potential customers of the lessor — large enterprises need to assess their ability to attract necessary monetary funds in order to fulfill contractual obligations.

Financial leasing is characterized by the fact that the partners who have signed the corresponding contract in the General case, not to terminate it within a certain period of time — usually before the costs lessor will not be compensated. You can extend it — but in this case usually increases the value of the objects that are passed from one partner to another. In fact, the lessor transfers, therefore, the property in the loan.

to contents ↑the Difference between operational and financial leasing

The main difference from financial leasing operational — no need to full compensation of costs of the lessor, his partner in the Contracting of the first type and have the corresponding obligations in the second case. This circumstance causes also the difference in the timing of the conclusion of leasing contracts and in the distribution of responsibilities for the maintenance of the functional condition of the assets.

Operational leasing can be seen as more attractive to small and medium-sized firms, because total payments, as a rule, much lower than in the case of a transfer of property under financial leasing. Hence less rigorous requirements for lessees, the lack of the need to engage with their part of the credit funds in large volumes.

Defining the difference between operational and financial leasing, reflect the findings in the small table.

to content ↑Comparative table

Leasing operational
Leasing financial

Does not obligate lessee to compensate lessor’s costs in maintaining the functional state of property transferred under the contract
Imposes respective obligations on the lessee

Is made through relatively short-term contracts — usually within 2 years
Is documented by relatively long-term contracts — typically 5 years

May not require the lessee borrowed funds
As a rule, requires the involvement of the lessee credit from a major financial organizations

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