Financial leasing is a type of leasing company that acts as a lessor, enters into a supply contract with a supplier at the request of the lessee, invests in the purchase of equipment selected by the lessee, and then leases the equipment to the lessee for use and collects rent. Financial leasing combines the characteristics of finance and trade, and is a new form of financial service. ‌
Definition and operation mode of financial leasing 
Financial leasing refers to the lessor purchasing relevant equipment according to the lessee's intention, and then leasing it to the lessee for use and collecting rent. During this process, the lessor retains ownership of the leased property, while the lessee has the right to use and is responsible for the maintenance and management of the equipment. Once a lease agreement is signed, neither party has the right to unilaterally terminate the contract during the lease period, unless the leased property is damaged or has lost its use value.
Characteristics of Financial Leasing
Separation of ownership and use rights: During the lease term, the lessor retains ownership of the leased property, while the lessee has the right to use it.
Financial Financing: Financial leasing not only involves physical delivery, but also involves the flow of funds, possessing the nature of financial financing.
Transfer of risks and rewards: Financial leasing essentially transfers all risks and rewards related to asset ownership.
The difference between financial leasing and installment payment
Ownership: In installment payment transactions, the buyer acquires ownership of the item; In financial leasing, the lessor retains ownership of the leased property.
Accounting treatment: Items purchased through installment payments belong to the buyer, are included in the buyer's balance sheet, and the buyer is responsible for amortizing depreciation; In financial leasing, the leased property is treated as a long-term receivable, and the lessee recognizes it as a fixed asset and depreciates it accordingly.
Tax treatment: In financial leasing, the lessor can deduct the amortized depreciation from the accrued income, while the lessee can deduct the amortized depreciation from the taxable income; In installment payment transactions, buyers can also deduct the amortized depreciation expenses from their taxable income and enjoy certain tax benefits.
The advantages and application scenarios of financial leasing
Financial leasing plays an important role in modern large-scale production conditions, which can promote technological updates, alleviate financing difficulties for small and medium-sized enterprises, and improve resource allocation efficiency. It is suitable for equipment procurement that requires a large amount of capital investment, especially for industries with fast technological updates and long investment return cycles, such as manufacturing, medical equipment, aviation, and other fields.