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Leasing offers significant advantages:

  • Leasing offers a fast and simple procedure.
  • Financing of the total value of the investment by the leasing company without, in many cases, any disbursement or participation from the lessee. Where the lesser is asking for participation, this is done through a down payment, normally amounting to between 5% and 20% of the total. This payment is also deductible for tax purposes.
  • There are several laws promoting investments. Those laws either subsidize part of the capital needed and part of the interest paid to a bank where the investor is requesting a loan, or subsidize the capital of the lease rental by a percentage depending on the region where the investment is made. In the case of a capital subsidy of the lease rental, the investor may also seek increased tax allowances in the first years of operation.
  • Leasing does not usually require additional collateral, such as mortgages etc, depending on the creditworthiness of the lessee.
  • Financial control and planning for the lessee is simple, since the amounts of the lease are usually predetermined for the entire period of the lease contract.
  • Flexibility in the timing of payments, which is particularly important for the companies whose cash flows are seasonal.
  • The tax deduction of the entire lease payment, combined in most cases with the shorter duration of the contract, offers tax advantages.
  • Additional financing source – the lessee can acquire fixed assets without burdening bank credit lines.