What is the difference between Finance and Leasing? - ProProfs Discuss
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What is the difference between Finance and Leasing?

Asked by Lysa , Last updated: Jun 02, 2022

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2 Answers

J. Alva

J. Alva

J. Alva
J. Alva

Answered Jun 24, 2020

Have you ever tried to buy a product with the promise that you would pay back after some time? This is what financing is all about. You are buying a very costly product that you can't afford at the moment, but because of a provision like this, you are allowed to buy it, but you would be paying a certain amount of money at the end of the month till you finish paying up for the real price of the product.

Leasing, on the other hand, is also one of the strategies used by businesses to allow people to use their products for a particular fixed time. This looks like when you are borrowing something from someone. In this case, you are not actually buying this product, but you are only renting it for a particular period of time. However, you will be paying a particular amount of money at the end of the month, but you do not own the asset after the contract expires.

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E. James

E. James

E. James
E. James

Answered Jun 23, 2020

Financing is a process where someone purchases relatively high priced items and pay the money back by making monthly payments. Two of the best examples of financing include purchasing a car and buying a house. Leasing is a process of borrowing. You do not make the purchase, the leasing company does. This purchase allows you to use the product for a certain amount of time, and the fixed payment is due each month.

At the conclusion of the lease, you don’t own assets, and the dealer owns it. The most common way of obtaining a product and financing or leasing is when the companies or manufacturers provide the offer in connection with their direct mail order. When financing, you will typically make a down payment. It is always better to give a fixed sum of money upfront so that you can diminish monthly payments. In leasing, a smaller amount is used to determine the incremental interest.

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