How to distinguish between operating leases and financial leases?

1, the purpose of different

Financial leasing is to obtain the ownership of equipment, such as financial leasing of a piece of equipment, the expiration of the lease period in the form of a nominal retention of the purchase price of the equipment can be obtained ownership; operating leases do not obtain the ownership of the equipment for the purpose of only short-term use.

2, the two judgment method is different

Financial leasing is in essence the transfer of all the risks and rewards associated with the ownership of the asset, in a sense for the determination of the exercise of the right of first refusal of the lessee enterprise, financial leasing is essentially the acquisition of fixed assets in installments of a modification of the purchase, but to be much higher than direct purchase. The operating lease is different, only the transfer of the right to use the asset, and the risks and rewards associated with the ownership of the asset has not been transferred, still belongs to the lessor, the lessee enterprise only according to the provisions of the contract to pay the relevant costs, the expiration of the lease term of the operating lease assets by the lessee enterprise to return to the lessor.

3, the leasing process is different

Operating lease leased equipment selected by the leasing company according to the market needs, and then look for the lessee, while the equipment leased under a financial lease by the lessee company to request the purchase or by the lessee company directly from the manufacturer or the seller of the selected.

4, the lease term is different

Operating lease period is shorter than the effective use of assets, while the lease term of financial leasing is longer, close to the effective use of assets.

5, equipment repair, maintenance of the responsible party is different

User of the equipment on the financial lease has the obligation to repair and maintenance of insurance and other obligations, while the operating lease does not have this obligation.

6, the expiration of the lease term equipment disposal method is different

Operating lease expiration, the leased assets by the leasing company to recover, while the expiration of the financial lease, the enterprise can be very little "nominal price" (equivalent to the residual value of the equipment market selling price) to stay buy.

7, the cost of leasing is different

Financial leasing to the possession of the leased equipment to calculate the amount of financing rent (generally based on the bank interest rate), the operating lease to the possession of the leased equipment to calculate the time of the lease (generally based on industry standards or industry rules). For example: finance lease a piece of equipment for 2 years, occupying the financing funds 1 million, monthly also leased 50,000, while the operating lease lease a piece of equipment for 2 years, can use the equipment for 2 years, the monthly rent of 40,000.

Extended information:

Operational leasing, also known as business leasing, is a symmetry of the financial leasing. It is a lease of assets that occurs to meet the temporary or seasonal needs of business use. Operating lease is a form of short-term lease, it refers to the lessor not only to provide the lessee with the right to use the equipment, but also to provide the lessee with equipment maintenance, insurance, repair and other specialized technical services of a form of leasing (financial leasing does not need to improve this service).

Financial Leasing (Financial Leasing), also known as equipment leasing (Equipment Leasing) or modern leasing (Modern Leasing), refers to the transfer of all or most of the risks and rewards associated with the ownership of the asset lease.

References:

Baidu Encyclopedia-Leasing