Differences Between Leasing and Credit

Differences between leasing and credit

The practical interest of leasing is to ensure the entire financing through borrowed funds for an investment, without any necessity for the user to take other insuring measures. This is the main feature that makes the difference between leasing and the traditional credit, where the user-company bears a part of the investment value.

Therefore, leasing as a financing technique is mainly developed for companies that seek to enlarge their activity and improve their performances, and more generally speaking, it ensures technical progress.

Comparison between Leasing and Credit

The following compares the two financing options:


  • Ensures the investment's financing
  • No material collaterals are usually requested
  • Because the leasing contract is a renting contract for a certain good over a period of time, the user doesn't appear with liabilities to banks, so the financial statements don't show these liabilities, and therefore the company's trustworthiness is not affected.
  • The duty fees are paid at the residual value
  • The fiscal deduction of some expenses.


  • Ensures the investment's financing
  • Supplementary expenses related to collaterals and insuring them (pawns, mortgages)
  • The financial statements show liabilities to the crediting bank.Supplementary expenses related to the credit commission, the monthly margin.
  • The duty fees are paid at the entire value of the good.
  • Equal expenses to the ones made for financing under a leasing system, but without the possibility of fiscal deduction except for the costs of the credit, not for the monthly installment

Read about advantages and disadvantages of leasing.

Comments 2 comments

profile image

sakesare 5 years ago

Great and comprehensive information here. Thanks for sharing..

SpiritLeo profile image

SpiritLeo 5 years ago from Europe Author

Thank you Sakesare! I am glad it was useful for you!

    Sign in or sign up and post using a HubPages Network account.

    0 of 8192 characters used
    Post Comment

    No HTML is allowed in comments, but URLs will be hyperlinked. Comments are not for promoting your articles or other sites.

    Leasing vs Buying a car - the differences

    More by this Author

    • Stylistic Devices

      The system of images includes both macro and micro images. Macro images are those that develop within the whole book or within a considerable part of it: characters’ images, the image of nature, the image of war...

    • The Advantages and Disadvantages of Factoring

      The factoring services consist of four main functions: Finance for the supplier; the factoring company pays the client the amount necessary for his working capital, in exchange for his invoices. ...

    • Steps to Text Analysis

      Introduction: briefly define the text type (the functional style and the genre), the topic, the problems raised, the cultural and historical background of the author and his text. Useful tips: The first step includes...

    Click to Rate This Article