Difference Between Leasing And Buying

Difference Between Leasing And Buying

The major dissimilarities or difference between leasing and buying can be highlighted as follows:

1. Introduction

Leasing: It is a legal contract between the owner or lesser and the user or lessee in which the owner grants the right to use asset (plant, machinery, equipment, car or other fixed assets) to the lessee.

Buying: Owing or obtaining the asset by paying money (lump sum or installment).

2. Ownership

Leasing: Ownership of asset remains with the owner (lesser)

Buying: Ownership of asset is transferred to buyer after the payment

3. Parties

Leasing: Owner of asset (lessor) and user (lessee)

Buying: Seller And Buyer of assets

4. Suitable

Leasing: It is suitable for short term use of asset

Buying: It is suitable for long term use of asset

5. Period/Term

Leasing: Lease agreement is done for fixed period

Buying: Asset is purchased for long term use

6. Responsibility Of Repair

Leasing: As per the lease agreement (mostly user is responsible)

Buying: Buyer is responsible for repair and maintenance

  Also Read: 

Difference Between Lease And Rent

7. Residual Value Enjoyed By

Leasing: Owner of the asset

Buying: Buyer of the asset

8. Tax Saving

Leasing: More

Buying: Less

9. Monthly Installment

Leasing: Less amount 

Buying: More

Leasing Vs Buying (Comparison Chart)

Basis	Leasing	Buying
Introduction	Right granted by the owner to the user to use asset	Owing the asset by paying money
Parties	Owner (lesser) and user (lessee)	Seller and buyer
Ownership Remains with	Lesser	Buyer
Suitable For	Short term use	Long term use
Period/Term	Fixed	Permanent Use
Responsibility Of Repair	Lessee	User/buyer
Residual Value	Lesser enjoys	Buyer enjoys
Tax Saving	More	Less
Installment	Less	More

I hope this post is helpful to understand the difference between leasing and buying and to make comparison between them.