What is a finance lease?

Financial leasing, commonly explained and you buy a house mortgage loan, somewhat similar.

Mortgage loan: the bank lends you money to buy a house, you pay the mortgage, the house to you to live, the loan is completed after the house to you.

Financial leasing in fact, to put it bluntly, is through the form of financing to realize the financing.

For example, if you need to buy a piece of equipment, but you don't have enough money, you can find a company that does financial leasing, and they will help you buy the equipment you need, and then you can have the right to use the equipment and the right to receive income after you pay a certain amount of money down, and you can also pay back a certain amount of interest every period.

The difference is: mortgage house, the house ownership to the borrower; and finance lease, the ownership of the leased property nominally belongs to the lessor. (After the expiration of the lease period, the ownership of the contract to determine the attribution)

Financial leasing (financial lease) is the most common and basic form of non-banking finance in the international arena. It refers to the lessor according to the lessee's (user's) request, and the third party (supplier) to enter into a supply contract, according to this contract, the lessor funded to the supplier to buy the equipment selected by the lessee. At the same time, the lessor enters into a lease contract with the lessee, leasing the equipment to the lessee and charging the lessee a certain amount of rent.

Difference with traditional leasing

Financial leasing and traditional leasing an essential difference is that: traditional leasing to the lessee to lease the use of the object of time to calculate the rent, and financial leasing to the lessee to take up the cost of financing the time to calculate the rent.

It is a kind of adaptable financing method produced by the development of market economy to a certain stage, it is a new type of transaction method produced in the United States in the 1950s, because it adapts to the requirements of the modern economic development, so it developed rapidly in the world in the 1960s and 1970s, and now it has become one of the main financing means for the renewal of the equipment of the enterprises, and it is known as the "sunrise industry". "sunrise industry".

China in the early 1980s after the introduction of this mode of business, more than three decades has also been the rapid development, but compared to developed countries, the advantages of leasing is still far from being played out, the market has great potential.