You are thinking of buying a new machine for your company, but when you apply for financing from the bank, the bank is giving you a hard time. Instead, it offers you the possibility of contracting a 'renting'. Are you interested?
What does renting consist of?
Machinery. The bank has informed you that the new machine can also be financed through a leasing contract (you thought that this form of financing was only used for vehicles), so, in principle, you are interested in analysing this option. Note. Leasing is equivalent to renting. In this sense, your company will be able to use the machine for the duration of the contract, in exchange for a fee that already includes maintenance and insurance, without the need to agree on a purchase option at the end of the contract.
Advantages. See some of the advantages that you will obtain with this form of financing:
- In some cases, leasing is not counted as a debt in the company's accounts, but the leasing fee is counted directly as a monthly expense, and nothing else. Note. In this way, your annual accounts will reflect lower indebtedness.
- Moreover, leasing will not limit your possibilities of financing yourself in the future, since, as it is a lease, banks do not count it as a risk for the purposes of the information they provide to the Bank of Spain's Central Credit Register (the so-called CIRBE).
What about the cost? On the other hand, by crunching the numbers with your bank manager, you have seen that this form of financing is not much more expensive than a normal loan. Just take note of this. So, for a machine valued at 20,000 euros (excluding VAT), the costs will be as follows:
- Option 1. A three-year lease will cost approximately 660 euros per month.
- Option 2. If you apply for a loan of 20,000 euros for the same term and at 8% interest, the monthly payment will be 627 euros. Attention! However, you will have to bear the annual maintenance costs (which in leasing are borne by the leasing company).
| Concept | Renting | Loan |
| Total instalments over three years | 23.760 | 22.572 |
| Difference | 1.188 | |
Analyse all the details
Caution. However, even if leasing seems to be an interesting alternative, do not consider it only in terms of the monthly instalment to be paid. Be careful! In this regard, also consider the type of machine to be financed, as well as the length of time it will be used in your company:
- Procurement. In leasing, you decide on the machine, model and supplier (although, in general, you will be obliged to purchase it from the manufacturer or an official dealer).
- Type of machine. If the machine is specific to your activity ("custom-made"), you may have more difficulties in formalising the leasing contract, or it may be more expensive, as the leasing company will calculate the instalments so that at the end of the contract it will have recovered the full cost of the asset, given the difficulty of "placing it" on the second-hand market.
- Useful life. Also bear in mind that at the end of the contract the machine will not be yours (whereas with a loan it will be yours, so you can continue to use it or even sell it and recover part of its value). The leasing offered by banks will therefore be interesting when the machines need to be renewed quickly, but not in cases where they have a long useful life.
The cost of leasing is comparable to that of a loan, making it an interesting alternative for financing. However, if you do not plan to renew the goods at the end of the contract, this alternative will not be as attractive.