This document discusses leasing and different types of leases. It defines leasing as a method of financing where the lessor retains ownership of an asset while allowing the lessee to use it by paying rentals over time. There are two main types of leases: finance/capital leases where the lessee selects an asset and pays rentals to cover its full cost, and operating leases for assets used for less than their full economic life. Real estate leasing involves renting property through a rental agreement or lease. The document also outlines advantages like financing flexibility and tax benefits, and disadvantages such as inadequate protection for the lessee and higher interest costs compared to other financing modes.

2. Members ID. No.
Md. Tariqul Islam 1504
Md. Mostafizur Rahman 2329
Tabassum Munira 2696
Fahim Hasanul Islam 1503

3. Leasing is a method of financing in which the lessor retains
the ownership of an asset whereas the lessee gets its possession
with right to use the same against payment of a specific amount
of rental over a period of time.

4. A finance lease or capital lease is a type of lease. It is a commercial
arrangement where:
 the lessee (customer or borrower) will select an asset (equipment, vehicle,
software)
 the lessor (finance company) will purchase that asset
 the lessee will have use of that asset during the lease
 the lessee will pay a series of rentals or installments for the use of that asset
 the lessor will recover a large part or all of the cost of the asset plus earn
interest from the rentals paid by the lessee
 the lessee has the option to acquire ownership of the asset (e.g. paying the
last rental, or bargain option purchase price)

5.  A contract between the lessor (owner) and the lessee(user).
 Payment of periodical rental to the lessor for using the asset by the lessee.
 Return the asset upon expiry of the lease term or its disposal in a manner agreed
upon between the owner and the lessee.

6. In addition to lease these companies also render some other services to raise their
funds:
 They allowed to accept term deposits with duration of one year and above,
 Mobilize term deposits by launching special schemes like monthly income deposit,
double deposit scheme, and triple deposit scheme etc.
 Issuing credit cards and undertake merchant banking activities with permission from
Bangladesh bank.
 Issuing debentures/bonds to raise funds.
 Term loans from commercial banks and other financial institutions.

7. The re are two main types of lease :
Equipment Leasing
Real Estate Leasing
Equipment Leasing :
The rentals cover some costs of equipment such as
depreciation, interest cost, maintenance cost, interest and a profit margin for the
leasing company.
It is two types-
Finance Lease
Operating Lease

8. Finance leasing :
Under a finance lease, the finance company owns the asset
throughout and the agreement covers a set period (considered to be the full
economic life of the asset). Often, there is an option to continue leasing at a
reduced, rate, at the end of the contracted period.
Operating leasing :
An operating lease runs for less than the full economic
life of the asset, and the lessee is not liable for the financing of its full value.
Real estate:
A rental agreement is often called a lease, especially when real estate
is rented. Real estate rentals are initiated by a rental application which is used to
build the terms of the lease.

9. Other types :
Sale & lease back :
A lease by a lessor who is the manufacturer or dealer, in which the
lease meets the definitional criteria of a capital lease or direct financing lease.
Direct Lease :
A non-leveraged lease by a lessor (not a manufacturer or dealer) in which
the lease meets any of the definitional criteria of a capital lease, plus certain additional
criteria.

10. • Ownership, possession are transfer to the
buyer.Sale
• Right of possession and use is transferred
against rental payment.Lease
• The owner of the goods agrees to let it to
the hirer on payment with an option for
hirer to buy the same on full and final
payment.
Hire Purchase

11. Advantages of Lease Financing
Financing of the full value
 Flexibility payment
 Piecemeal medium term financing
 Tax concession
 Procedural convenience
 Softening of inflationary impact
 Budget planning is convenient
 Preservation of credit capacity
 Elimination of some other risk

12. Disadvantages of Lease Financing
Inadequate Protection Against Loss :
Lessee is not the owner of the assets that’s why the
lessee remains at a disadvantage in case of loss.
Loss of Terminal Value :
In case of some assets like land , there may be some increase in
the value but the lessee is not entitled to it because he is not the owner.
High Interest Cost :
The cost of leasing is generally higher than other modes of financing
due to higher interest rate as well as some other cost involved in it.

13. Disposal of Repossessed Assets :
From the lessor’s perspective the default of the
lessee may force it to repossess the assets which he cannot dispose of readily.
Consequence of Default :
In case of non-compliance of any terms and conditions the
lessor may terminate the lease and takeover the assets at its will leaving the lessee
in the lurch (Danger).

14. If we weigh the advantages and disadvantages as well as cost and
benefits, the scale will weigh heavily in favor of leasing. We can foresee
that as the economy reaches a higher level of leasing will emerge as an
important source of alternative finance in the financial sector.