Rent vs lease

Both rent and lease are financial operations very specific that at some point you will be able to sue based on your real needs. Well, they are characterized simply by being two financing alternatives that are very similar to each other, but they have some differences that you should pay attention to from now on. Whatever the case, they focus on the long-term rental of a tangible asset. By way of example, a vehicle, a property, material for the company or even technological equipment.

Whatever the case, it is in the purchase of a car that these financial operations are mainly applied. When the rent is a contract by which the landlord trespass on the right use an asset for a tenant, in exchange for payment of rental income for a specified period. While the definition of leasing, on the contrary, is the one that refers to the system of leasing of capital goods by means of a contract that provides for the option of purchase by the lessee. As you have seen, they are very similar in their conceptions.

At first glance, a first difference that you can find between these two terms is the one that refers to the object of the contract. And very particularly to accounting since throughout the rental you can consider as a simple expense, the lease affects the liability accounts for the amount of the debt. It will be a divergence that will be very important to select one or the other model. And that will depend on the purpose of the operation you are going to perform. Without being neither better nor worse one or the other, it will depend on your real financing needs.

At the end of the contract

One of the most decisive moments to differentiate both financing models is when the contract ends. Because then its true meaning will vary. But do you really know in what way? Well, as far as leasing is concerned, it will be when you return the material good acquired, such as the car, which is the most usual case. What's more when the contract is extended or basically at the exact moment in which the transaction to purchase the aforementioned asset is carried out.

On the contrary, in renting you have two very well defined alternatives. On the one hand, when returning the good acquired or on the contrary when the duration of the contract is extended. As you have seen, there are some small differences that can affect you by choose one or another financing model. Even when the decision you are going to make will depend on many personal and even economic variables. On the other hand, it must not be forgotten that renting can be more favorable in some situations than in others with respect to leasing.

How long are the contracts?

Another relevant aspect is that which has to do with its expiration. Because in effect, this factor will also be decisive for you to choose one or the other solution in your company or line of business. For this purpose, the lease is much more aesthetic because it needs a minimum duration of two years. Therefore, it provides greater rigidity to operations, even though in exchange it provides that it can be negotiated by either of the two parties.

Renting, for its part, is characterized by its mobility and flexibility so that you can adapt to each of the cash situations that you may go through from now on. Not surprisingly, it consists of financing that is especially designed for the shortest term. Where there are no periods, there are no minimum periods of duration, as is the case with the previously disclosed financing facility. From this scenario, it can be said that types of financing that aim to meet a demand from entrepreneurs and small and medium-sized entrepreneurs are opposing. Beyond other technical considerations that on the other hand will have to be analyzed in this post.

What services do you offer?

On the other hand, it is also essential to pay attention to the service that these special lines of credit are going to offer you. Because they won't be the same for each of these models. Because in effect, the rental is a contract for the rental of physical property. And therefore it is not limited only to the purchase of cars, as many users may believe. If not, on the contrary, it is an operation much more open to other transactions. As an example, those made for the acquisition of a computer, television, musical equipment or any other need that you may have from now on.

It is no less important in the specific case of the purchase of a vehicle since it implies a wide range of services and benefits and those suffered by the other operation we are talking about, in other words, leasing. Not in vain, if you opt for the first of them you will have a Comprehensive insurance, roadside assistance or a replacement vehicle, among some of the most relevant. Something that would not happen to you if your decision to finish opts for leasing. Among other reasons because all the repairs must be done by yourself. With what in the end the expenses will be much higher than you think from the beginning. These are small details that you should take into account so as not to have other surprises when signing the contract.

Advantages offered by the rental

Renting, on the other hand, offers you A lot of advantages, such as the opportunity to have assets without increasing our level of indebtedness or being a tax deductible expense for companies and freelancers, even if not for individuals. As for the purchase of a motor vehicle, it is also appreciable the fact that you will not have to worry about paperwork, paying taxes and other important reasons. Not surprisingly, it will be the rental company itself that takes care of these administrative procedures. To the point that you may be more inclined to sign this financing procedure.

Within this scenario, you must also examine other aspects such as the good you want to finance from now on. Because depending on which one you will have to sign one or another contract and that will lead to the characteristics of the movement being absolutely different. Although it is true that you will have no choice but to have the structure of these two operations established. Beyond the amount they can achieve since this is another aspect that does not affect the operation.

What does vehicle insurance cover?

Perhaps you have not stopped at this effect of this financing procedure, but undoubtedly you should take it into account from now on. Because the fleet rental insurance is intended for vehicles of any class that require a liability insurance Mandatory, in other words, not just cars, vans, trucks, motorcycles, etc. If not, on the contrary, they also impact industrial and professional machinery vehicles. To this end, it must not be forgotten that each rental company offers different contracts with their own characteristics and coverage. Are you interested in knowing which are some of the most common? Well, pay a little attention because from now on you will be able to get out of doubt.

• Insurance contracting in different modalities feasible (all risk, against third parties, theft or fire, among another range of contracted policies).
• Roadside assistance national or international, even though in most cases you must provide a minimum mileage on your car.

Whatever the case, it will be very important that you compare the offers that they make you because there can be many differences between them. From this dynamic, and as a result of its administration, you will be able to save more euros than you think since this it is a very flexible product. To such an extent that you can mold it to your own needs as users who are in this class of very special financial instruments. Even though it will be of special importance that you analyze them to the smallest detail so that you make the fewest possible mistakes.

Disadvantages of renting

On the other hand, this financing procedure presents some other damage to your personal interests and among which the following sections stand out.

1. If in the end you generate a early termination can create a very high compensation. To the point that it could cost you a lot of money and in any case more than you expected from the beginning. To this end, you will have no choice but to establish your real needs in each moment and situation.
2. Of course it is not an alternative available for all the goods that a company may need.
3. You may not know it, but this procedure requires a I deposit in the bond. This movement in your capital may not be the most opportune at any time in your life.
4. And finally, the incorporation of possible clauses of penalty fee due to overuse of the property, and that may cost you more than expected.