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Leasing vs. Renting: What's the Difference?

Leasing vs. Renting: What's the Difference?

Leasing is now firmly established as a reliable tool for financing in medium-sized companies and is a good alternative to buying a property. Lessees appreciate the many advantages that a leasing contract offers in terms of liquidity, predictability and the balance sheet. There is only ambiguity in the demarcation from classic rent and the differences between the two methods. Here is an overview in preparation for the new leasing contract!

What is leasing?

In fact, leasing is a so-called atypical rental agreement between a lessee (tenant) and a lessor (landlord). This means that due to the freedom of contract applicable in Germany, the content of the leasing contract can also deviate from the legally regulated provisions of tenancy law. It is precisely from these deviations in all their manifestations that the differences to the rental agreement arise. With leasing, various aspects of the rental are regulated differently, since the purpose is also different - for example financing.

An example: When renting a car, it is generally not customary for the renter to determine the make, equipment features or color of the vehicle - with leasing, on the other hand, it is. In addition, very few vehicle renters are likely to have attracted positive attention from their rental company with their rental car through an inspection.

This is exactly where an essential difference becomes apparent: leasing is a financing alternative with corresponding advantages, which, in contrast to renting, is designed for long-term use with the possibility of purchase at the end of the contract period. However, the purchase intention is not in the foreground.

Rights and obligations

In accordance with the relationship, leasing and rental contracts also have a similar character. Depending on the individual agreement and the desired long-term use, however, maintenance, servicing and insurance are transferred from the lessor to the lessee over the entire term of a leasing contract. But there are also full-service options that offer this in the form of an all-round carefree package in which the lessee pays a fixed fee to the lessor. In the case of a rental agreement, these obligations are generally the responsibility of the landlord in accordance with the Rental Act.

In addition, renting and leasing also differ in another point: While renting is usually concluded for an indefinite period (such as in the case of privately used real estate) and for a short period of time - for example as a replacement for your own car - the leasing contract is for a very specific person Period created. The term is basically flexible, but is limited by the legal framework .

Fixed leasing rate vs. variable rent

With a leasing contract, the term and the leasing rates including the agreed additional services (full service) are already fixed at the beginning, so that the lessee can plan fully. In the case of rent, on the other hand, rent increases over the term are possible and customary within a certain legal framework. This is also a significant difference.

Conclusion: For companies, leasing is the optimal way to finance and use a wide variety of objects, which thus offer the best conditions for economic operation in the face of tough competition. In short - a smart alternative to a purchase.

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