Lease What is it
What is Finance lease? • Leasing is an innovative way of acquiring equipment, machinery or other assets without having to pay the full amount upfront. • Leasing is defined as a written contract between a leasing company (called "the Lessor") on the one part and the user of the equipment (called "the Lessee") on the other part whereby the Lessee agrees to pay the Lessor a specified sum of rentals over an obligatory period of time in consideration for the use of capital equipment owned by the Lessor without the Lessee having to purchase or own the equipment. In other words, it is a rent of property on a long-term basis with the right of the subsequent repayment. • Sale and leaseback occurs when the enterprise-owner of equipment experiences lack of floating funds and sells its equipment to a leasing company, which leases the property back to the enterprise. • At the end of finance Lease the ownership of the asset is transferred to Lessee at predetermined price, after payment of all the obligations.
Who can lease? • • Sole proprietorship concerns Partnership firms Private Limited Companies Listed and unlisted local and multinational joint stock companies • Liaison offices of multinationals Usually the term of lease contract is 3 - 5 years
Which assets can I obtain on Leasing? • buildings, facilities, machinery, equipment, IT equipment, office equipment, fixtures, vehicles, land plots and any other inconsumable goods can be leased. • Securities and natural resources can not be the leased asset;
• • Who is the owner of the equipment? Lessor preserves the right of ownership of the leased asset within total contract validity and payment of all obligations by Lessee • Who will be responsible for the quality of assets and delivery of the leased asset? • The Supplier is responsible to the client for asset quality and delivery and Lessor does not hold any responsibility for any issues pertaining to quality and delivery of asset. What will happen at the end of the Lease? At the end of finance Lease the ownership of the asset is transferred to Lessee at predetermined price, after payment of all the obligations.