Operational or Financial Leasing Which is More Advantageous?

19 Mar

The most popular and the most frequently chosen form of financing in most enterprises and individual clients is credit. Leasing is an alternative to the loan, which is why it is worth analyzing what is a better form in a given situation. http://mp3ar.com has more information

Leasing or a difficult product? Everyone has heard about him, everyone knows that it applies to companies, cars or machines. What is it really and what is the leasing agreement? For many, it still remains a big mystery. We go with help and explain in a simple way that it is understandable.

Leasing is one of the ways to finance investments, being to some extent an alternative to a loan or a loan. More convenient and cheaper, among others due to the fact that the repaid installments to the leasing company are not so high. Why, that the lease is based on different assumptions that are different than in the case of a loan. Leasing is first and foremost more available and more flexible than a bank loan. The quicker and simpler contracting procedure is caused by the fact that the leasing company bears a much lower risk than the Bank. The collateral is a leased product whose owner remains the leasing company until the purchase. For example, a leasing company (lessor) is included in the vehicle registration document. This record can only be changed after the end of the contract. An important benefit for the lessor from the point of view of the accountant is the possibility of making depreciation write-offs. The leasing installment is the tax deductible cost, thus reducing the tax base. In addition, by financing equipment or machines in this way, you do not burden your creditworthiness and you can spend your free money on investment and development – and it always pays off. After paying off all the fees included in the contract, it is possible to buy a vehicle that has been leased. And the lessee has the right of first buyout, and the price that is determined usually fluctuates within 1% of the initial value of the vehicle.

If you run a business, you do not have to present a stack of documents or show a high credit rating. Simplified procedures, quick decision and lack of security speak in favor of this form of financing. Consumer leasing operates on the same terms, which is why it is a great choice for people who work on a contract, contract or free profession. You do not waste hours preparing papers and certificates, you do not wait in the queue, you do not waste time. And time is money!

Leasing applies not only to cars, although it is best associated with it. With Leasing you can finance anything from machines to production lines. In the case of vehicles, a major convenience is the settlement of all formalities by the lessor, among others such as registration or insurance. Thanks to the concluded group contracts, the lessor can offer you preferential prices of leasing services, such as insurance or maintenance of fixed assets.

As an entrepreneur, you will encounter two types of leasing, i.e. operating and financial leasing. The choice may depend on the needs of settlement of tax costs and the length of the period in which you plan to use the subject of the lease.

Financial leasing and Operating lease – Basic differences. 

Financial leasing and Operating lease - Basic differences. 

Financial leasing – by selecting this type of leasing contract the taxpayer (entrepreneur) must know that the subject of the lease will be included in the lessee’s assets. The taxpayer is obliged to make depreciation write-offs, that is, contrary to the case of operating leasing. It should be remembered that the tax-deductible costs can only include the interest part of the leasing installment to the tax-deductible costs. However, VAT should be paid in full in advance at the first installment just after the receipt of the item. The customer becomes the owner of the leased asset automatically after the payment of the last installment.

Operating leases – in the case of this type of contract, the subject of the lease is included in the lessor’s assets. The obligation to make depreciation write-offs belongs to the leasing company. Therefore, the lease-making expenses for the use of the subject of the contract are added to which VAT and the initial fee are added. The sum of the fees set in the contract, reduced by the VAT due, must correspond at least to the initial value of fixed assets. At the end of the term of the agreement, the lessee has the right to buy the used item.

Summing up, the decisive factor in choosing the form of leasing will certainly be the initial costs, which are much lower in the case of operating leasing, due to lower equity involvement. The most popular form of leasing on the Polish market is operational leasing, probably because in the case of financial leasing, VAT should be paid in full in advance.


  • Duration of the contract
  • Cost of getting income
  • Tax Vat
  • Depreciation
  • It is possible to buy

Financial leasing

Financial leasing

  • over 12 months
  • included in the costs part of the lease installments and amortization
  • paid in advance when paying the first installment
  • lessee’s obligation (customer)
  • along with the last installment, the item becomes the property of the user

Operating lease

Operating lease

  • longer than 40% of the time of depreciation of the item
  • counted as net installment costs and initial payment
  • added to leasing installments
  • lessee’s obligation (providing company)
  • depending on depreciation rate and maturity period

Consumer leasing

Consumer leasing


There is also a product on the market called consumer leasing – a service addressed to people who do not run a business.

From 2011, our law allows you to take a vehicle in so-called consumer leasing for people who do not run a business. This means that anyone who decides to buy a new car may consider leasing it. We would like to remind you that for many years this form of financing was available only to enterprises. Is it, however, a solution that is beneficial for an individual customer?

Leasing companies attract customers with a lower interest rate than in the case of a loan, however, you should pay attention to additional costs with this form of financing. It is primarily about the absolute necessity to purchase full insurance and usually there is no possibility to choose the most advantageous offer. The lessee is forced to accept the offer of the company with which he cooperates with the lessor. In addition, the contract usually states that the vehicle must be regularly serviced at authorized vehicle repair stations, which entails additional expenses. It has a special place when a small repair is involved, for which the service will charge more than we would if we used the network points that are available on our market and which do not differ, quality from authorized networks. An additional downside is that cars that are in leasing can not be freely resold during the lease contract. As for the advantages of such a solution, it minimizes all formalities. Most of the formalities are taken by the leasing company and it is she who makes sure everything is taken care of properly. The company’s side also includes all technical and formal issues in the event of damage. An additional advantage is that to sign such a contract, you need your ID card, a certificate of earnings and your own contribution, which is usually referred to as the initiating rent. The amount of the contribution varies from 15% to 30% of the initial value of the car. As for the repayment of installments and their amount, they are fixed and usually their repayment period does not exceed 5 years.

In summary, consumer leasing is not very popular on our Polish market for at least two main reasons:

The first reason is that leasing companies in Poland, even if they have it in their offer, do not promote it enough. The second reason is still the psychological barrier caused by the fact that the car in lease until the purchase is owned by the leasing company and if something happens to the car during the contract, the customer stays without a car, on the proverbial ice.

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