Leasing, also known as financial leasing, is a contract through which an entity (the lessor) allows another individual or company (the lessee) to use an asset for a specified period in exchange for regular payments. The lessor is the owner of the asset and leases it to the lessee for their use in return for receiving regular payments.
Fátima Rivera, an associate lawyer at Torres Legal, explains that leasing is commonly used in the business sector to acquire high-value assets such as industrial equipment, machinery, vehicles, or even real estate. "The lessee has the right to use and enjoy the leased asset during the agreed-upon term, taking on the responsibility for its maintenance and care," our Corporate Department lawyer explains.
One of the distinctive features of leasing is that, at the end of the contract, the lessee has the option to acquire the asset by making a previously established additional payment known as the residual value. According to Rivera, this purchase option at the end of the contract provides the lessee with the opportunity to use the asset during the agreed-upon term and then decide whether they want to acquire it permanently or not.
"Leasing offers several advantages for both the lessor and the lessee. For the lessee, it allows them to use assets without incurring a significant initial outlay, as payments are made over time," Rivera emphasizes. Additionally, our specialist notes that the lessee can benefit from certain tax and financial advantages, such as the ability to deduct leasing payments as operating expenses.
"On the other hand, the lessor receives regular income from leasing the asset and can recoup the investment made in it. Furthermore, they retain ownership of the asset, giving them the option to lease it to other clients at the end of the contract with the initial lessee," our expert assures.
Rivera also mentions that leasing is a financial lease contract that enables a company or individual to use an asset in exchange for periodic payments over a specified period: "It is a flexible and attractive option for acquiring high-value assets without making a significant initial investment."
-Written by the Torres Legal Team.