Leasing: how the finance lease works
Leasing , known in Italian as a finance lease , is a form of contract that allows the use of an asset for professional or commercial purposes, with the possibility of purchasing the property at the end of the contract. According to the Italian legal system, this is one of the so-called “new contracts”, which have introduced new forms of contractual relations in Italy, particularly between companies. Leasing is in fact a tool often used by companies and professionals for the use of capital goods for their professional activities: however, it can also be exploited by private citizens and the public administration.
How does leasing work?
This contract constitutes a form of financing, which allows the applicant to obtain the availability of an asset that is instrumental to his activity, in exchange for the payment of a periodic fee . Furthermore, upon the natural conclusion of the contract, the beneficiary can purchase the asset covered by the contract by paying an amount that will in any case be lower than its market value: in this case one speaks of lease redemption. In essence, with the financial lease it is possible to exploit a useful asset to one’s own professional activity by paying periodic payments and leaving open the possibility of buying it after a certain time: a convenient solution for companies and professionals who need a certain instrument and cannot however buy it immediately.
Three parts are involved in the leasing contract
- the first is the user , ie the person requesting the financial lease to be able to use the asset in question;
- the second is the grantor , who purchases the instrumental goods and “lends” them to the user, in exchange for the payment of the fee, remaining however owner until the actual purchase by the applicant;
- the third is the supplier , who immediately sells the good to the grantor.
Precisely because there are more parties involved, and all of them aim to protect their own interests, the trend of payments borne by the user changes over time. The first payment in fact often constitutes a “maxicanone” , a payment higher than the subsequent ones, aimed at protecting the grantor and supplier regarding the return from their financial exposure. Subsequently, the payments will be regular, to then eventually reach the payment of the final quota with which one becomes owner of the good. However, the purchase at the end of the lease is not mandatory.