Write the difference between leasing and financing.


The major differences between leasing and financing are as follows −

LeasingFinancing
  • Legal agreement between lessor and lessee.

  • Ownership is with lessor.

  • Principal and interest component is considered.

  • Risk is with lessor.

  • Very affordable.

  • We can use the asset.

  • Monthly payments are low.

  • Choice of buy the asset or return to the lessor is available.

  • Partial amount is paid to buy the asset.

  • Ownership is with the borrower.

  • Down payment or instalments are considered.

  • Risk is with borrower.

  • Restricts affordability.

  • We can own the asset.

  • High monthly payments, when compared to lease.

  • Own the asset after fully payment is made.

Updated on: 24-Jul-2020

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