Leasing: Basics

Leasing refers to the medium and long-term rent of business assets. The payment rates and instalments for the entire period of the leasing agreement are defined at the outset. The lessee, as a rule, is not required to input its own equity capital; there is no capital commitment.

The leased asset remains the property of the leaser, who will usually reassume the exploitation of the asset at the end of the leasing agreement. This is in contrast to finance leasing: the investment asset is transferred into the ownership of the lessee upon payment of the final instalment.

Forms of investment such as leasing are gaining in importance, due not least to the more rigid criteria imposed with regard to the issue of credit by the banks (Basel II). Balance sheet ratios and equity ratios are the decisive keywords here. Leasing is a balance sheet neutral financing form that helps create the room for manoeuvre to make necessary investments. In this way you will be able to react flexibly to market opportunities.