Leasing
Leasing is used as a method of financing investments. A lease is a commercial arrangement, where by an employment owners or manufacturer conveys to the equipment uses, the right to use the equipment in return for rentals.
Financial Lease:
In this lease lessor transfers the risk and rewards incidental to the ownership of equipment to the lessee while but the title may not be transferred to the lesse while rentals are payable in installments. So as to cover the cost of equipment plus reasonable return on funds invested in purchase or manufacture of that equipment. The legal and de jure ownership is with lessor while the de facto ownership lies with the lesse.
Operating Lease:
In operating lease, all risks and rewards incidental to ownership are not transferred to the lesse but involves only short term hire of the equipment with the ownership resting with the lessor. This type of leasing is prevalent in motor cars, computer equipment etc.,
Source: Books and Notes
Tags: financial, Financial Lease, Hire, Hire Purchase, Lease, Leasing, Operating lease, Purchase
By: Management Duniya
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