3. Definitions-Leasing
A “lease” is defined as a contract between a lessor and a lessee for
the hire of a specific asset for a specific period on payment of
specified rentals.
A lease is a contract conferring a right on one person (called a tenant
or lessee) to possess property belonging to another person (called a
landlord or lessor) to the exclusion of the owner landlord.
implied or written agreement
agreement promises
assured consistent payment
The maximum period of lease according to law is for 99 years
http://www.yourarticlelibrary.com/law
5. Types of Leasing
A Finance lease
Operating Lease
Sale and Lease Back
Direct Lease
Single Investor Lease
Leveraged Lease
Domestic Lease
International Lease
6. Types of Leasing- A Finance lease
Is mainly an agreement for just financing the
equipment/asset, through a lease agreement.
7. Types of Leasing- Operating Lease
Operating Lease
Is one in which the lessor does not transfer all
risks and rewards incidental to the ownership of
the asset and the cost of the asset is not fully
amortized during the primary lease period
Earth Moving Equipments,
8. Types of Leasing- Sale and Lease Back
the owner of an equipment/asset sells it to a leasing company
(lessor) which leases it back to the owner (lessee).
9. Types of Leasing- Direct Lease
The lessee and the owner of the equipment are two different
entities.
A direct lease can be of two types: Bipartite and Tripartite lease.
10. This is a bipartite lease in which the lessor is solely
responsible for financing part.
The funds arranged by the lessor (financier) have no
recourse to the lessee
Types of Leasing- Single Investor Lease
11. This is a different kind of tripartite lease in which the
lessor arranges funds from another party linking the lease
rentals with the arrangement of funds
Types of Leasing- Leveraged Lease
12. if all the parties to such agreement are domiciled in
the same country.
Types of Leasing- Domestic Lease
13. if all the parties to such agreement are domiciled in
the same country.
1. Import lease
2. Cross border lease
Types of Leasing- International Lease
14. ADVANTAGES TO LESSEE
Additional Sources of Funds
Less costly
Ownership preserved
Avoids conditionality
Flexibility in structuring rental
Simplicity
Tax Benefit
Obsolescence risk is averted
15. Full Security
Tax Benefit
High Profitability
Trading on Equity
High Growth potential
ADVANTAGES TO LESSOR
18. A hire purchase agreement is defined in the Hire Purchase Act, 1972 as
peculiar kind of transaction in which the goods are let on hire with an
option to the hirer to purchase them, with the following stipulations:
1. Payments to be made in installments over a specified period.
2. The possession is delivered to the hirer at the time of entering into the
contract.
3. The property in goods passes to the hirer on payment of the last installment.
4. Each installment is treated as hire charges so that if default is made in
payment of any installment, the seller becomes entitled to take away the
goods.
5. The hirer/purchase is free to return the goods without being required to pay
any further installments falling due after the return.
CONCEPT OF HIRE PURCHASE
19. The buyer takes possession of goods immediately and agrees to
pay the total hire purchase price
Each installment -hire charges
The ownership of the goods passes
In case the buyer makes any default in the payment
The hirer has the right to terminate the agreement any time
FEATURES OF HIRE PURCHASE AGREEMENT
20. Review Questions
1. Define the following Terms
a. Lease
b. Lessor
c. Lessee
d. Tenancy
e. Rent
2. Enumerate and Explain different types of Leasing
3. Illustrate the advantages of leasing to Lessee and Lessor
4. Compose the Concept and Features for Hire Purchase