Leasing is an alternative type of financing. Instead of buying equipment (e.g. cars, IT equipment, aid facilities) it is leased or rented from a leasing company. All prices, terms of delivery, etc. are negotiated, as usual, between the municipality or institution and the supplier, and only then does the leasing company come into the picture.
The leasing company prepares a leasing agreement which establishes the length of the leasing period and terms of payment.
When the leasing period expires, the equipment will be bought at the agreed written-down value by a buyer assigned by the municipality or the institution.
The advantages of leasing
- The purchase price can be distributed over a number of years.
- It is typically possible to buy more and thereby obtain a larger quantity discount.
- A complete replacement of aid facilities for moving people will usually mean a more rapid improvement of the working environment.
- Aid facilities - such as beds and ceiling hoists - will typically have a longer lifetime than the duration of the leasing period.
The disadvantages of leasing
- The customer is bound to pay a fixed sum for a number of years.
- There may be a smaller interest margin between the leasing interest and the loss of interest in connection with self-financing.
- Leaders may experience pressure from staff and users to replace aid facilities more rapidly.
Read more about leasing in The Bognæs Home - a Danish case story