What's the difference between financial leasing and traditional credit?

Financial leasing is an important financial tool, which refers to the transaction that the lessor rents the leased property obtained from the supplier to the lessee for possession and use according to the lessee's choice or approval of the leased property and the supplier, and collects the rent from the lessee. It is very different from credit financing. The main differences are as follows:

The terminology is different. Bank credit business is mainly based on working capital loans below 1 year, as well as medium and long-term loans; The lease term of financial lease is usually determined according to the lease term of the leased property, and the equipment lease is generally 3 to 5 years;

Repayment method. Generally, the bank working capital loan is a one-time repayment of principal and interest after maturity, and the medium and long-term loans are basically paid off in half a year or one year, and each repayment amount accounts for a large proportion of the total loans; The repayment method of financial leasing is more flexible, and the repayment method can be customized according to the cash flow of the enterprise, which can be monthly, quarterly and annual, with less repayment pressure;

Guarantee method. Bank credit usually needs mortgage, pledge or third-party guarantee, and it is difficult for small and medium-sized enterprises to increase their credit; Moreover, financial leasing has more flexible means to increase credit, and high-quality leased property can further increase credit. The headhunting company of financial leasing claims that the role and position of financial leasing will become more and more important in the future economic development of China.