What Is Financing By Leasing?

A lease is a contract in which the leaser gives the leases the right to use an asset for a specified period pf time in exchange for periodic rental payments.  The leasee is a tenant or renter.  Examples of assets frequently acquired by lease include automobiles, building space, computers, and equipments.

Many individuals, groups and institutions are being developed very lately involved in leasing various types of assets as an important source of financing.  People rent houses and apartments, and even furniture.  Business firms rent stores, offices, factory buildings, and ware houses.  A company may purchase the assets needed in business operations, or as an alternative, it may lease them.

Some specified companies have grown up that lease assets to business.  Insurance companies often purchase building and lease them back to the user, as do many individual investors.  Airline lease their plans with funds lent by bank and other financial companies.

Cost of lease:  The leasing financing also very well plans out satisfactory interest returns plus an allowance for depreciation costs, arranging and advertising costs and also profit margin.  In this way cost of lease is much more than the rate of interest.

Leasing now has become new and modern way of raising finances needed for company's major assets.