Question 1

What is a finance lease?

Accepted Answer

A finance lease is a type of commercial lease in which the legal owner of the asset — in this case, a tractor — rents the asset to the user of the tractor for an agreed-upon period. When a lessee enters into this agreement, they have full operating control of the asset. They will have responsibility and assume the risks and rewards that come with owning the asset. For accounting purposes, the lease gives the lessee the same economic characteristics as if they had full ownership of the tractor. The lessee will record the asset as a fixed asset on their balance sheet. In this situation, the lessee will record the interest of the lease payment as an expense. The lesser charges rent in exchange for lending the asset. The lessor retains ownership of the asset but the lessee gains exclusive use of the asset (providing they abide by the terms of the lease). The lessee is obliged to make rental payments that cover the original cost of the asset. There is an obligation to pay all of the fixed rental amounts, sometimes including a percentage of the purchase price of the vehicle at the end of the contract.

Question 2

What is an operating lease?

Accepted Answer

An operating lease in contrast is the simplest form of equipment leasing, where the customer doesn't take on the risks and rewards that come with owning the asset (such as maintenance costs). An operating lease or contract hire is a way of renting an asset for your business over a short or medium time frame without taking on any risk. With an operating lease, you can get a tractor hire over a fixed term, with lower monthly payments and without the commitment of ownership.

Funding Options Blog

Open Banking: 5 fabels en feiten

Wat gebeurt er als ik niet in aanmerking kom voor financiering?

Bedrijfsovernames financieren: een handleiding

4 tips bij het regelen van je aangifte inkomstenbelasting

Horecaondernemers: klaar voor een heropening?

Verdere uitbreiding coronasteun - wat verandert er nu?

Financiering voor e-commerce bedrijven: ben jij klaar voor groei?

Funding Options op 223e plaats in FT 1000: ‘Europe’s Fastest Growing Companies 2021'

5 tips voor thuiswerken

Elke maand handige tips en inzichten ontvangen?

Menu

Juridisch

Contact