leasing vs renting

Do you want to know what is the difference between leasing and renting a car? You are on the right spot to know the answer of this question.

Renting and leasing are two apparently similar options, but very different in reality. In case you have doubts about these concepts, here we leave you their similarities and their differences.

How Car Renting and Leasing are not Similar?

Both are actually a way of renting a vehicle, nothing more. The main difference is that leasing is a rental of a vehicle with a mandatory purchase option and renting is not.

A leasing contract  is a financial leasing contract in which the leasing company is obliged to offer the purchase of the vehicle after X years from the beginning of the contract, while in the renting the compulsory purchase option is not contemplated (although the leasing company renting can offer this possibility of purchase after a certain time).

The renting contract is a commercial leasing contract by which a company (lesser party) makes a vehicle available to a client (lessee party) in exchange for a daily, weekly or a monthly fee.

This is a contract that does not transfer ownership of the vehicle, but rather assigns the right of use to the vehicle and in which other services such as vehicle maintenance or insurance is usually included.

Also, in the case of leasing, the installments include the total price of the vehicle, since the future purchase of the vehicle by the client is foreseen from the beginning, although the client can also decide not to buy the vehicle at the end of the contract. .

Hence, both the duration of the contracts and their accounting are totally different.

Difference between Leasing and Renting a Car

Being intended for the purchase of the vehicle, leasing contracts are always long-term, normally from 2 to 6 years. By contract, the duration of the lease depends on the type of lease: 12 months, 24 months or long-term lease of up to 4 years.

There is an even the flexible renting modality in which there is no commitment to stay and the user can return the vehicle without penalty, once the minimum period has elapsed.

While in car renting is considered an expense and therefore can be up to 100% deductible in the payment of VAT or personal income tax, leasing affects the liabilities and assets of the company and if it is going to be carried out the purchase at the end of the contract is recorded as an acquisition of fixed assets.

Now we believe that you have no more concern to learn about the difference between the car renting and car leasing.

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