Renting - Term Overview

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Renting is a contract for the rental of a movable property in which one of the parties (the lessor) agrees to assign said movable property in exchange for the other party (the tenant) to pay a periodic fee.

It's a lease agreement that has a number of particular characteristics that make it different from leasing or other rental agreements. See differences between renting and leasing.

Characteristics of the renting contract

The main characteristics of this system are the following:

- It's a long-term rental: The contract usually lasts more than one year.
- Rental of a personal property: Personal property is understood to be that property that can be easily moved from one place to another, maintaining its integrity. There are many types of movable property: from furniture to intellectual property rights or bills of exchange. The most common movable asset in rental contracts are automobiles, although it's possible to formalize it on others such as computer equipment. This means that you cannot formalize a rental contract on real estate.
- The tenant can be both a company and an individual: That is, whoever rents the movable property can do so for a professional or personal purpose. This is an important difference from other types of exclusive company contracts, such as leasing.
- The lessor can be a financial entity or a specialized company: An individual, for example, cannot be the lessor or owner of the property on which the renting is formalized.
- The renting contract includes a series of services in addition to the rental of the personal property itself: For example, in the rental of a car, in addition to the enjoyment of the car itself, other services such as maintenance, repair or insurance are included.
- In renting there is no purchase option at the end of the term of the contract: Unlike, for example, leasing.
- Landlord and tenant can set particular conditions at the time of the formalization of the contract. In any case, the above characteristics are common in all rental contracts.

Main advantages and disadvantages of renting

While there are several advantages, the main ones are the following:

- As in all rental contracts, it's not necessary to make a down payment or go into debt to use the personal property.
- In renting, as we have commented previously, a series of additional services are offered that improve the enjoyment of the property by the tenant.
- The lessee is going to enjoy a new property and, therefore, that offers the maximum possible benefits. Once the property wears out or is amortized, the usual thing is to sign a new rental contract and enjoy the same good, but without that wear, since the landlord will offer you the same good and in new conditions.

The main disadvantage of renting with respect to other rental regimes is its high cost, since the periodic installment to pay is usually higher than in the other modalities.

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