The specific difference between an operating lease and a financial lease

1. The role is different.

Because the leasing company can provide ready-made financial leasing assets, so that the enterprise can be obtained and installed in a very short period of time with a small amount of funds, and can quickly play a role and produce benefits, therefore, the financial leasing behavior can enable the enterprise to shorten the construction period of the project, effectively avoid market risks, and at the same time, avoid the enterprise due to insufficient funds and let go of fleeting market opportunities. Operating leases enable enterprises to selectively lease assets that they urgently need but do not want to own. In particular, equipment with high process level and fast upgrading is more suitable for operating leasing.

2. The judgment methods of the two are different.

Financial leasing assets are purchased by professional leasing companies and then leased to enterprises that need to use them. Financial leasing is essentially an alternative to the purchase of fixed assets in installments, but it is much higher than outright purchases. However, the operating lease is different, only the right to use the asset is transferred, but the risks and rewards related to the ownership of the asset are not transferred, and it still belongs to the lessor, and the lessee only pays the relevant expenses in accordance with the contract, and the operating lease assets that expire are returned to the lessor by the lessee enterprise.

3. The leasing procedure is different.

The equipment leased by the operating lease is selected by the leasing company according to the needs of the market, and then the lessee is looking for the lessee enterprise, while the equipment leased by the financial lease is purchased by the lessee enterprise at the request or selected by the lessee directly from the manufacturer or seller.

4. The lease term is different.

The operating lease term is shorter, which is shorter than the effective life of the asset, whereas the lease term of the financial lease is longer, which is close to the effective life of the asset.

5. The responsible parties for equipment repair and maintenance are different.

Operating leases are the responsibility of the leasing company, while financial leases are the responsibility of the lessee.

6. After the expiration of the lease period, the equipment disposal method is different.

After the expiration of the operating lease, the leased assets are recovered by the leasing company, and after the expiration of the financial lease, the enterprise can retain and purchase a small "nominal price" (equivalent to the market selling price of the residual value of the equipment).

7. The essence of the lease is different.

An operating lease does not essentially transfer all the risks and rewards associated with the ownership of the asset, whereas a financial lease essentially transfers all the risks and rewards associated with the ownership of the asset to the lessee.

An operating lease is a leasing method in which the leasing company leases the relevant items to the lessee and collects the lease fee.

Financial leasing is a way in which the lessor purchases the leased property from the seller according to the lessee's choice of the seller and the leased object, provides it to the lessee for use, and the lessee pays the rent.

The difference between the two is that the leased property of the operating lease is purchased by the company in advance and used for special leasing. Financial leasing is based on the requirements of the lessor, the purchase of the leased object and then lease to the lessee.

Operating leases are mainly asset leases that occur to meet temporary or seasonal needs of operations.

Features:1The risks and rewards associated with ownership are not actually transferred, and ownership of the leased assets ultimately remains with the lessor.

2.Lessors generally need to go through multiple leases before they can recoup their investment in the leased assets.

3.Operating leases are relatively short and generally do not extend to the full useful life of the leased asset.

4.After the expiration of the lease term, the lessee returns the equipment to the lessor; Alternatively, the lease contract may be terminated early at the request of one of the parties.

A financial lease is a lease that substantially transfers all the risks and rewards associated with the ownership of an asset.

Features:1The lessor retains ownership of the leased assets, but all of the risks and rewards associated with the leased assets have substantially transferred.

2.Leases are usually non-cancellable or can only be cancelled in certain exceptional circumstances.

3.The lease term is long, including almost all the effective life of the leased asset.

4.Under normal circumstances, a financial lease can recover all the investment in the use of the leased assets and obtain a reasonable profit through only one lease.

5.At the end of the lease term, the lessee has the right of preference to purchase the leased assets at a low price; or take the form of lease renewal; or return the leased assets to the lessor.

There are the following differences between a financial lease and an operating lease.

1. The purpose is different.

2. The judgment methods of the two are different.

3. The leasing procedure is different.

4. The lease term is different.

5. The responsible parties for equipment repair and maintenance are different.

6. After the expiration of the lease period, the equipment disposal method is different.

7. The cost of leasing is calculated differently.

Operating leases, also known as business leases, are symmetrical financial leases. It is an asset lease that occurs to meet the temporary or seasonal needs of business use. Operating lease is a form of short-term lease, which refers to a form of lease in which the lessor not only provides the lessee with the right to use the equipment, but also provides the lessee with maintenance, insurance, repair and other specialized technical services of the equipment (financial lease does not need to improve this service).

At the same time, the identification criteria for the leasing asset are: first, the lease period accounts for more than 75% of the remaining useful life of the asset on the lease start date; (2) the minimum lease payment to be paid to the leasing company is equal to or greater than 90% or more of the carrying value of the asset at the lease commencement date; Third, the lessee has the right of first refusal to purchase the leased asset, and the purchase amount paid when exercising the right of first refusal is less than 5% of the fair value of the leased asset on the date of the right of first refusalThe four-wheel width means that the lessee has the right to continue to lease the asset, and the lease fee paid by the lessee is less than 70% of the normal lease fee of the leased asset on the lease expiration dateIn a sense, for the lessee that determines the right of first refusal, financial leasing is essentially an alternative way to purchase fixed assets by installments, but it is much higher than direct purchase.

Legal basis

Civil Code of the People's Republic of China

Article 707:Where the lease period is more than six months, it shall be in writing. If the parties have not adopted written form and cannot confirm the term of the lease for more than six months under Article 707, they shall adopt written form. If the parties do not adopt written form and cannot determine the term of the lease, it shall be deemed to be an indefinite lease.

If the lease term is fixed, it shall be regarded as an indefinite lease.

Article 710 If the lessee uses the leased property in accordance with the agreed method or according to the nature of the leased thing, resulting in the loss of the leased thing, it shall not be liable for compensation.

Article 715 With the consent of the lessor, the lessee may improve or add other things to the leased property. If the lessee improves or adds other things to the leased property without the consent of the lessor, the lessor may request the lessee to restore the original state or compensate for losses.