'Leasing' and 'renting' take off as new forms of rental financing

  • Banks expand their catalog of goods and services available in 'leasing' and 'renting', which do not require purchase and are accessible to companies and individuals.
  • The new investment in these two types of modalities grew 40% at the end of last year.
  • In Spain there are two types of financing that were born practically within the automobile.
  • View or download the PDF of 'My Pocket' for the month of September.
Renting y leasing

Leasing and renting open a way of financing companies, especially SMEs, at a time of difficult access to credit or traditional loan. GTRES

The beginning of the economic recovery in Spain is being measured from different areas. One of them is the activity in leasing and renting, two formulas that allow you to enjoy a good or service paying a rent and without needing to buy.

According to the Spanish Association of Leasing and Renting (AELR), the new investment in these two types of modalities grew 40% at the end of last year, above the 6,500 million euros. It was the best result obtained in the last three years. And the good run has been extended to 2015. In the first quarter, companies allocated 1,539 million to this activity , representing an increase of 20% compared to the same period in 2014.

In August, 7,021 vehicles financed by renting were registered (16% more than in the same month of 2014). Both for AELR and for AFI (International Financial Analysts), which jointly carry out this type of statistics, the strong improvement in this financing demand it is due to the recovery of industry, construction, the excellent evolution of the tourism sector , and support plans for the purchase of vehicles, such as the PIVE Plan.

"Based on the historical behavior, it is observed that for each increase of one percentage point of the investment in leasing and renting , that of the economy as a whole grows 0.27%," the experts conclude.

In all sectors interest has grown in the use of these two rental formulas; even in the least usual. Elevating machines, computers, tablets, medical equipment, furniture, pleasure craft, even airplanes for the airlines have been leased. But special attention has been given by customers to vehicles, public works machinery and those destined for industrial production. One reference: in August, 7,021 vehicles financed by renting were registered (16% more than in the same month of 2014).

Leasing and renting have a similar purpose, which is the enjoyment of a good without the need for an initial outlay . The main difference is that leasing gives purchase option at the end of the lease. The renting is a rent in itself.

More than half of the entities in Europe used this financing system for the development of their businesses. Of their advantages companies and citizens can participate, although the offer is much more developed for the business world, especially for the smaller ones (SMEs) ). For individuals, it focuses almost exclusively on car rental .

But for all, it is a convenient and easy way to access a series of services that, in a traditional way, such as through a loan, would be more complicated. Banks have extended their offer significantly in recent years. Until recently, it was difficult to find the possibilities that are present in the catalogs of financial institutions.

There are also more automotive brands that offer this alternative . The use and enjoyment in this type of rentals is subject to a series of conditions. But the requirements are usually more lax than a loan in itself, although the interest rate applied to the rent may be similar. The payment in the renting is usually somewhat higher because it includes expenses such as maintenance, repairs or insurance. But the advantages go further.

Companies can enjoy tax deductions with important advantages for their income statement. For example, according to Santander calculations, the financial / fiscal savings for a company requesting furniture leasing could reach 4% compared to other financing options, since it allows greater deduction in the VAT part. The savings would rise to 7% in the case of real estate leasing .

Banks also receive important benefits; basically two: customer loyalty and commissions. Most importantly, the delinquency rate is much lower than that of loans or loans.

The take-off of leasing and renting is taking place at a European level. According to the consultant Oxford Economics, SMEs in the Old Continent invested more than 120,000 million euros through leasing last year. More than half of the entities used this financing system to develop their businesses. This balance shows that in addition to the economic reactivation, companies, especially SMEs, continue to have difficulties in accessing traditional bank credit.

The Internet is also making a significant dent in this environment . In addition to computer equipment rentals, one of the novelties is web renting, which allows having an online presence with its own management in exchange for paying a monthly fee to a company that is responsible for the design, domain contract, positioning, updating, maintenance … Rentingweb, Moweb or Waka Solutions are some of the entities with this service.

Automotive brands develop their own offer

Leasing and renting are not new financing formulas. Its appearance dates back to 1920, in the United States, when the company Bell Telephone System decided to rent its terminals because of the difficulty it encountered in selling them. Companies like IBM quickly imitated this model in the face of its success.

The economic development and the changes in the needs and financing offers have meant that both leasing and renting have been extended to all sectors and countries.

In Spain there are two types of financing that were born practically within the automobile. For example Leaseplan, car rental, has been present in the country since 1985.

The dealers, the brands themselves, apart from the banks, are the ones that have increased the offer the most. Today you can find renting and leasing of own brands such as Renault, Audi, Mercedes, Volkswagen, Toyota, Nissan, Seat, Hyundai … Up to Porsche!