1) Leasing and loan are mutually exclusive markets
Leasing and loan are the products of the same equipment financing industry. The entire equipment financing opportunity, both tapped and under tapped are the potential markets for leasing, just as they are for the loan products.
2) Leasing is undertaken only when one is unable to avail a loan
Leasing and loan are products of equipment financing. Today the market has adopted both these products. A decision is made based on its merits and its suitability to the overall requirement of the company. Both lease and loan can co-exist to fund any expansion project.
3) Leasing is always expensive than loan
The cost of leasing is fully dependent on equipment assessment and financial credit. It is not necessary that it will always be expensive than the loan.
4) Leasing does not require financial credit assessment
Similar to loan, leasing companies also undertake a detailed financial credit of the company and gauge its ability to pay the lease rentals
5) Type and nature of equipment does not play a major role in leasing
In any leasing transaction, significant weightage is given to the type and nature of equipment. Every leasing company will evaluate the quality, utility and resale ability of the equipment.
6) Leasing is not reported into CIBIL
Majority of the leasing transactions are reported into CIBIL. CIBIL does have a separate option to report leasing transactions
7) Depreciation availed under ownership provides higher tax shield / tax benefit
Lease rentals under operating lease are 100% tax deductible expense. Based on the pricing of the lease, the rentals can offer lesser, equal or more tax benefit than as
compared to depreciation. It is not mandatory that depreciation will always offer more tax benefit.
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