Leasing is a form of rental which eventually offers the company the option of purchasing the vehicle. As with any model of acquisition or rental, there are advantages and disadvantages. At Servitir we have drawn up a list of advantages for your company of this method of financing:
The total cost can be financed: benefits of leasing a vehicle include having greater liquidity, access to other types of investment, and no need to remove capital from the firm, which is an important factor for a firm’s life expectancy.
These transactions do not form part of the commercial financial risk of the firm when it comes to banking purposes because the good (in this case the vehicle) has not been purchased. Operating leases do not add debts to the financial statement, therefore, the entire cost is absorbed by the company's results.
Important tax advantages can be obtained, because the value of the repayment quotas can be considered as tax expenditure, whereby the total value of the machinery or equipment can be deducted as an expense, except for the payment of the residual value of the good.
Protection against obsolescence: Since a vehicle is a good that depreciates and after a few years loses its utility, the lease reduces the risk of obsolescence for the lessee and in many cases the risk passes to the lessor in the form of residual value.
Greater flexibility and speed in obtaining a technological renewal of equipment or vehicle fleets. As mentioned, because of the protection from obsolescence; some leasing contracts allow for technological renovation of equipment or vehicle fleets.
Leasing provides several benefits to the finances of the company, as well as optimizing material and human resources. Likewise, it provides flexibility and removes the risk involved in capitalizing on the purchase of an asset as large as a vehicle.