The Difference between Financing and Finance Leasing Should Be Understood

Many people get confused between the terms financing and finance leasing and think that financing and finance leasing are the same things. However, both the terms mean completely different things. By getting financed, you are supposed to erect then your own infrastructure and other assets but as far as finance leasing is concerned, that is purely a rental agreement between the two parties. You can’t use the asset of the owner after a stipulated time limit as agreed if a new renewal has not been done.

What is the actual meaning of finance leasing?

The term finance lease is nothing more than an agreement. In this system, the complete ownership of the item rests with the lender, and the other party can only use that asset for a stipulated period. The use of this asset is purely legal up until the time of agreement, and fully rental is up - after this time, the asset will have to be returned to the owner. If you want to carry on using the asset, then have the term extended and again use the same on a rental basis. Every financial lease provides the right of use to the concerned individual. Various financial service providing agencies are working in the UK that can arrange the assets on lease to those who need them. You may have seen that in spite of having a good turnover, some companies pay rental to the landlord for long period of time. This is so they can fully utilise the assets and save their own investment. One main reason for using an asset on lease is to avoid taking risks in erecting the complete infrastructure yourself.

Equipment leasing is also a rental agreement

As with the term of other assets, equipment can also be leased. More often it is seen that some people own machinery but don’t have a use for it. They therefore lend it to other parties on a stipulated rental agreement. Different types of machines are available to rent, and many financial companies can provide machinery to different businesspeople for further use. Equipment Leasing is nothing more than the provision of mechanical support on a rental basis.

Every type of equipment and machinery is available for leasing

Various categories of machines are available which suits the nature of whatever business you are in, and technical support from some of the companies is also available. Apart from the normal business machines like agricultural, conveyor belts and conveyors, shredders and such like, you can also get some engineering machines to suit the nature of your business.