Leasing is an essential concept in business, especially for those start-ups or small enterprises that need capital to enhance their operation due to limited resources or no mortgaged assets for bank loans in the early stage of operation. Therefore, business owners often consider whether financial lease or operating lease matches their requirements.
The main difference between finance leases and operating leases is that it is based on the accounting method in addition to other terms such as lease tenor, risks & return, cancellation... So how will a business owner choose between financial lease vs operating lease?
Let’s take a look at the most significant differences between these two:
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