Simply put, it can be understood as the income that can be obtained in other uses after a certain resource is put into one use.

We often compare financial leasing with loans. Who has higher financing cost? If the opportunity cost is not added, incorrect conclusions may be drawn. For example, people usually think that the financing cost of financial leasing is higher than that of bank loans. The main reason for this misunderstanding is that the opportunity cost is not considered.

First of all, from the interest rate point of view, the leasing company's funds come from banks, so the financing cost must be higher than that of banks. But opportunity cost is not necessarily considered. Bank loans are based on capital occupation. You can work out the cost as much as you put in. Financial leasing is based on the subject matter of the leased property to calculate the cost. Some manufacturers rent under the slogan of "zero" interest rate, which is actually a means of promotion. There is no such thing as a free banquet, and the interest has been included in the sales price in advance from the date of purchase.

For the above reasons, it doesn't make much sense to talk about interest rates with leasing companies. There may be interest rate problems in the accounting treatment of financial leasing, but it is not the interest rate given by the leasing company, but the rate of return of the leasing company. Used for financial processing, it can't truly reflect the financing cost.

The second concept is that the interest rate of banks is higher than that of leasing companies. Because the bank's interest rate cannot rise or fall at will, there are policy restrictions. The interest rate of the leasing company can be determined according to the bargaining of both parties, which is supported by policies. But now the bank's policy has begun to change, in fact, the loan interest rate is not capped. For enterprises with poor credit, the interest rate of bank loans will not be low. Financial leasing is also the second best project for banks, because it adds a real right guarantee. There won't be much difference in interest rates, because banks need high interest rates to do such projects.

Third, the operating procedures of financial leasing projects are much more open than bank loans, the bidding procedures are simpler, and the negotiating parties are more equal. There are fewer under-table transactions such as meals and kickbacks, and the trading time is faster. The opportunity cost of using financial leasing is much smaller than that of bank loans if the benefits brought by early production are taken into account.

Fourth, financial leasing has unique tax benefits that cannot be obtained by any financing method. In addition, the approval process is simple, which is also an important reason why financial leasing has become the main financing channel for foreign SMEs.

More than 70% customers of construction machinery and equipment are small and medium-sized enterprises. They do not have the strong strength to engage in public relations in banks, and banks are not interested in microfinance. Therefore, banks stopped financing enterprises in this way after paying off the pain of mortgage loans. Financial leasing also quietly emerged at this time.

In the new economic environment, people should have certain financial knowledge, which is commonly known as "financial quotient" (another kind of wisdom besides IQ). The real meaning of financial leasing should be financial leasing (in English, finance, finance and financing are all one word). In this way, the problem of financing difficulty can be solved and the opportunity cost can be reduced.

Opportunity cost is a very special cost in economics, which is both virtual and real. Refers to the investment opportunity of 1 lost in other aspects after focusing on one aspect.

Samuelson used the example of hot dog company to illustrate the concept of opportunity cost in his economics. The owners of the hot dog company work 60 hours a week, but they are not paid. By the end of the year, the company had made a considerable profit of $22,000. But if these owners can find other jobs with higher income, their annual income will reach 45 thousand dollars. Then these people's hot dog work will produce an opportunity cost, which means that they have to lose other more profitable opportunities because of their hot dog work. For this matter, economists understand that if they subtract their lost opportunity income of $45,000 from their actual profit of $22,000, they are actually losing money, and the loss is $45,000-$22,000 = $23,000. Although in fact they are profitable.

So how to understand the above phenomenon?

Let's assume that they still get $22,000 from investing in hot dog job P (with their own labor) and $45,000 from investing in a job Q (with the same labor). Then according to people's understanding of the concept of opportunity cost, the opportunity cost of their work P is the income of their work Q, which is $45,000. Similarly, the opportunity cost of their job Q is the income of their job P, which is $22,000. The income of work P and Q is the opportunity cost of each other.

But in fact, because any unit's investment (whether labor investment or capital investment) is focused, it is impossible to imagine that the investment will get the benefits of two injections (the so-called "two injections" means two or more injections at the same time, such as 1 unit investment, which is impossible. 1 unit investment can only focus on a certain point of an industry at the same time, which is the "investment focus"). Generally speaking, 1 investment cannot assume that two (or more) investments are obtained at the same time. Therefore, when calculating the opportunity cost, we can't use the double-bet income of 1 investment or its double-bet cost. For example, we can't calculate that they want to get the income from work Q while making hot dogs, so if they can't get this income, they are considered to have the opportunity cost. If they can really get such secondary betting income, they should get secondary betting income of $22,000+$45,000, not just $22,000 or $45,000.

However, what people usually think of as "the opportunity cost of mutual income of jobs P and Q" seems to have the duality of investment and income, because it wants to get the income of job Q at the same time as the income of job P. When it can't get the income of job Q, it is considered as a loss. Especially in the case of higher income, I want to get lower income. For example, when you get more benefits from working in Q than from working in P, you still want to lose less benefits from working in P. In this case, the understanding of opportunity cost is wrong.

In fact, the opportunity cost should be like this: work P has opportunity cost to work Q, but work Q has no opportunity cost to work P, because the income of work P is less than work Q, so the so-called opportunity cost is actually only "relative opportunity cost" and there is no absolute opportunity cost. When a person's job income is relatively low, compared with the job you can do with higher income, the opportunity cost is generated. For example, a person can be a manager or a teacher, and the income of a manager's work is obviously greater than that of a teacher. Therefore, when you work as a teacher, there is an opportunity cost problem relative to the manager's work, but we can't conversely say that working as a manager will make you lose the lower income of the teacher's work, thus generating the opportunity cost. Compared with low-paid jobs, high-paid jobs have no opportunity cost, because you find better opportunities and get better income. The so-called "opportunity" here is actually an opportunity to seek greater interests. Since we have gained more benefits, the loss of benefits brought by the loss of opportunities is relatively gone.

Then, because the income from working in P is less than that from working in Q, the opportunity cost is the income from working in Q minus the income from working in P, that is, 45,000-22,000 = 23,000 dollars. As a result, they lost $23,000. If their income from work P increases gradually, from 22,000 to 40,000, then their lost opportunity cost is only 45,000-40,000 = 5,000 dollars. If their income from work P increases to 45,000 equal to their income from work Q, then their opportunity cost of work P is equal to zero, that is, 45,000-45,000 = 0. If the income of job P increases to say 50,000, the opportunity cost of their job P is 45,000-50,000 =-5,000 dollars relative to their job Q, and the opportunity cost is negative. What does negative opportunity cost mean? It shows that compared with their job Q, their job P not only has no opportunity cost, but also greatly "offsets"! As a kind of cost, cost always tends to be minimized, so the smaller the opportunity cost of a job, the better, and its minimum value naturally includes negative numbers below 0.