Operating lease is not always more profitable than a loan

Service Business

Are there situations when a loan can be more profitable than an operating lease?

Janusz, Bogatynia


An entrepreneur who faces the need to invest in the development of his own company has to choose the method of financing. The most popular forms are credit and operational leasing.

Under the operating lease, the leased item is classified as the lessor's property, and it is also required to make depreciation. Leasing installments, along with the initial payment, constitute tax deductible costs for the lessee. In the case of an operating lease, the lessee has the right to buy the leased asset after the lease term has expired - then it also becomes its owner.

If you choose a loan as a source of financing, we become the owners of the item at the time of purchase. The costs of obtaining income include monthly depreciation charges and interest on the loan.

You can often come across statements that an operating lease is more profitable than a loan. However, this is not always the case:

  1. In the event of loss or damage, the way in which the item is financed is of great importance. In the case of an operating lease agreement, due to the fact that the owner of the property is the lessor, all remaining installments and the redemption fee will become immediately payable. However, in the case of a loan, the loss of the item acquired from the funds obtained from it will not result in the need to repay the entire debt.
  2. The settlement of VAT on the loan is made once on the basis of the purchase invoice received. When leasing, VAT is added to each leasing installment and thus settled over time.
  3. Leasing companies are reluctant to finance used items, and it does not matter for the bank whether the financed item is new or used.
  4. With the loan, we are entitled to a one-off, favorable depreciation of fixed assets (except for passenger cars) as de minimis aid.

Therefore, it is worth considering all the pros and cons of operating leasing and credit before choosing the form of financing. As you can see, it may turn out to be more beneficial for us.