Leasing is a special form of investment financing agreement which offers tax advantages by reducing investment costs.
Calculation: Fixed lease payments simplify your internal cost allocation.
Liquidity: 100% debt financing, no tied-up capital.
Tax: Lease payments are fully deductable as a business expense, reducing your investment costs.
Costs and Benefits: The monthly lease payments can be financed by the operating revenues of the assets.
Hire purchase is a form of financing mobile capital goods. Upon signing the hire purchase agreement the goods are entered into the balance sheet of the lessee with the applicable depreciation. By paying the final installment of the hire purchase agreement the goods automatically become the property of the lessee.
Calculation: Fixed monthly payments. Lease term is largely independant of statutory depreciation period.
Liquidity: 100% debt financing, no tied-up capital.
Tax: You can claim special write-offs or grants from your regional economic development programs.
Costs and Benefits: The costs can be written off by e.g. long-term subletting of the containers without an immediate equity outlay.