MEANING OF LEASE AND FINANCE 

LEASE

With financing, you own the vehicle. When the loan is over, you own the vehicle “free and clear” and can continue driving it or resell it or whatever. The advantage to you is that you actually own the vehicle and are free to do whatever you want with it. The disadvantage to you is that you actually own the vehicle and are now responsible for selling it.

 

FINANCE

With financing, you own the vehicle. When the loan is over, you own the vehicle “free and clear” and can continue driving it or resell it or whatever. The advantage to you is that you actually own the vehicle and are free to do whatever you want with it. The disadvantage to you is that you actually own the vehicle and are now responsible for selling it.

With leasing, the dealership owns the vehicle. At the end of the loan period, they would like to get the vehicle back in great shape so they can resell it. The advantage to you is that you’re paying a small monthly fee to drive a nice new vehicle and you don’t have to worry about selling it at the end of the loan. The disadvantage is that the dealership might charge you extra for mileage over a specified annual mileage allowance or they might charge clean and repair the vehicle when you’re done with it

Difference Between Lease and Finance

1. When an asset is leased, and the same asset is financed, the amount of monthly installment of the leased asset will be low as compared to the financed asset.
2. A kind of financial agreement in which the lessor purchases the asset and lets the lessee use it, for money consideration is called a lease. Finance means a kind of loan arrangement whereby you are allowed to buy an asset, and the financial institution pays money on your behalf of you. In this way, the arrangement creates an indebtedness of the buyer to the financial institution.
3. The nature of lease is loan agreement whereas the nature of finance is rental agreement.
4. The consideration paid for the lease is known as lease rentals. Conversely, in finance, while buying the asset you need to pay the cash down, i.e. down payment and the remaining amount in equal monthly payments.
5. Cancellation f the lease only on the occurence of certain events whereas in Finance it s done anytime hence it is flexible.
6. Lease usually includes the first month’s payment, a refundable security deposit, down payment, taxes, registration fees, and possibly other fees. Finance usually include the cash price or a down payment, taxes, registration fees, possibly some other fees.