What is the difference between Financial Lease and Operational Lease?

At Lease.car, we understand that choosing between financial lease and operational lease is an important decision. Both options have their own advantages and differences, and it is essential to understand which one best suits your specific needs. Let's take a look at the difference between financial lease and operational lease:

Financial lease: Your car, your property

Financial lease allows you to finance a car and take economic ownership of it. Here are some key features:

• Ownership: With financial leasing, you are the immediate economic owner of the car, which means it will appear on your company balance sheet.

• Depreciation: You are responsible for the depreciation of the car.

• Maintenance and insurance: The maintenance and insurance of the car are your responsibility.

• Influence on balance sheet: The car affects your financial balance sheet and asset position.

• Flexibility: You can customise the car to suit your wants and needs.

Operational lease: Hassle-free driving, no ownership

Operational lease offers the option of renting a car for a fixed monthly amount. Here are some key features:

• No ownership: You don't become the owner of the car; it remains the property of the leasing company.

• Includes maintenance and insurance: Maintenance, insurance and often other services are included in the monthly lease rate.

• No worries about depreciation: You do not take the loss from any depreciation of the car.

• No balance sheet impact: The car is not on your company balance sheet, which can have tax advantages.

• Fixed monthly fee: You know exactly what you will pay each month, with no unexpected costs.

• Flexible terms: You can adjust the term of the lease and the number of kilometres to suit your needs.

What is more advantageous, operational lease or financial lease?
It depends on your personal situation and needs. Operational lease usually has a fixed monthly rate and includes maintenance, insurance and other services, making it easier to budget.
Financial lease allows you to take ownership of the car and can offer tax advantages, but usually requires a larger initial investment and you cover the cost of maintenance and insurance yourself. It is important to compare both options and assess which one suits you best based on your financial situation and needs. But what are actually the differences?

Operational Lease: Flexibility Without Surprises

With operational lease, as a business owner, you enjoy the flexibility to grow without investing large sums of money immediately. This type of lease will not appear on your balance sheet, leaving your financial ratios unaffected. The risk of depreciation lies with the leasing company, allowing you to focus on your business.

However, at the end of the lease period, you have to return the asset, unless you opt for a net operating lease where purchase is possible. In addition, the monthly cost for a lease including services can be higher, depending on your needs.

Financial Lease: Control and Ownership

Financial lease lets you stay in control: you become the direct owner of the asset, which can offer significant tax advantages, such as investment deductions and interest deductions. This form of lease allows you to spread the purchase cost, which preserves financial room for further business growth.

The risk of depreciation and the responsibility for maintenance and repairs, however, lie with you. Moreover, financial leasing is recorded as debt on your balance sheet, which can affect your solvency ratio. This aspect is crucial for entrepreneurs who value full control and independence in maintaining their assets.

How to choose?

Choosing between financial lease and operational lease depends on your personal and business situation. Consider the following questions:

●      Do you want to own the car?

●      Do you prefer a fixed monthly fee with no worries about maintenance and insurance?

●      What tax aspects are important to you?

At Lease.car, we are happy to help you make the right choice. Our expert advisers are available to discuss your specific needs and offer a tailored leasing solution. Contact us today and find out which leasing option suits you best. At Lease.car, you'll be behind the wheel yourself!