This document provides an overview of leasing and hire purchase concepts. It discusses:
1) Leasing involves a lessor owning an asset and a lessee making periodic rental payments to use the asset, while hire purchase allows a buyer to pay for goods over time and eventually own them.
2) There are different types of leases - financial leases provide long-term ownership, operating leases are short-term, and leverage leases finance large assets.
3) Hire purchase agreements require a down payment, allow ownership after all payments, and interest payments are tax deductible for buyers.
Hire Purchase System
The process of Hire Purchase
Features of Hire Purchase
Advantages and Disadvantages of Hire Purchase
Contents of Hire Purchase agreement
Installment Purchase
Important Definitions
Difference between Hire Purchase and Installment Purchase
Difference between Sales and Hire Purchase
Lease
Features of Lease
Merits and Demerits of Lease
Difference between Hire Purchase and Lease
Hire Purchase System
The process of Hire Purchase
Features of Hire Purchase
Advantages and Disadvantages of Hire Purchase
Contents of Hire Purchase agreement
Installment Purchase
Important Definitions
Difference between Hire Purchase and Installment Purchase
Difference between Sales and Hire Purchase
Lease
Features of Lease
Merits and Demerits of Lease
Difference between Hire Purchase and Lease
Lease Financing
Terminology
The advantages of leasing
Limitation of leasing
Types of Leasing
Financial lease
Operating lease
Sale and lease back
Leveraged leasing
Direct leasing
Other types
Problems of leasing in India
Leasing and hire purchase are both financial arrangements.Sonam704174
Leasing and hire purchase are both financial arrangements for acquiring assets. Leasing involves renting an asset for a specified period, while hire purchase allows the buyer to use the asset during the payment period with ownership transferring after the final installment.
Hire purchase as a financial service.pptxSudhamathi4
Hire Purchase - Meaning
Hire purchase is an arrangement for buying expensive goods, where the buyer makes an initial down payment and pays the balance plus interest in installments.
The term hire purchase is commonly used in the United Kingdom and it's more commonly known as an installment plan in the United States.
Hire Purchase - Meaning
According to the Hire Purchase Act of 1972, the term ‘hire purchase’ is defined as , “ an agreement under which goods are let on hire and under which the hirer has an option to purchase them in accordance with the terms of the agreement, and includes an agreement under which:
A. Possession of goods is delivered by the owner thereof to a person on the condition that such person pays the agreed amount in periodic payments.
The property of the goods is to pass to such a person on the payment of the last of such instalment
Such a person has a right to terminate the agreement any time before the property so passes.”
Features of Hire Purchase
The asset ownership is transferred to the buyer only after the final installment is paid.
Buyer pays for the asset in regular installments, which includes both the principal amount and the interest.
Asset itself serves as security. In case the buyer fails to pay installments, the seller can repossess the asset.
The buyer has the option to buy the asset at any time by paying the remaining installments in one go.
Interest is charged over unpaid balance instead of the original price of the asset.
Until the final payment is made, the maintenance of asset remains the responsibility of the buyer, not the seller.
Buyer can terminate agreements at any time before taking ownership of the asset.
Interest is charged over unpaid balance instead of the original price of the asset.
Until the final payment is made, the maintenance of asset remains the responsibility of the buyer, not the seller.
Buyer can terminate agreements at any time before taking ownership of the asset.
Interest is charged over unpaid balance instead of the original price of the asset.
Until the final payment is made, the maintenance of asset remains the responsibility of the buyer, not the seller.
Buyer can terminate agreements at any time before taking ownership of the asset.
Rights of Hirer
The hire purchase act of 1972, provides the following rights to the hirer
Rights of Protection
It is not possible for the hire vendor to terminate the hire purchase agreement on account of default in payment of hire charges by the hirer, or due to unauthorized act or breach of express conditions, unless the hire vendor gives notice in writing to the hirer in this regard
Right of Notice
When the hire charges are weekly, or for a period less than that, one week notice is to be given, and in all other cases a two weeks notice is to be given.
Right of Repossession:
The right of repossession is not available to the hire vendor, unless sanctioned by the court in the following cases:
1. one half of the price has been paid where the
Unit 8 - Information and Communication Technology (Paper I).pdfThiyagu K
This slides describes the basic concepts of ICT, basics of Email, Emerging Technology and Digital Initiatives in Education. This presentations aligns with the UGC Paper I syllabus.
Macroeconomics- Movie Location
This will be used as part of your Personal Professional Portfolio once graded.
Objective:
Prepare a presentation or a paper using research, basic comparative analysis, data organization and application of economic information. You will make an informed assessment of an economic climate outside of the United States to accomplish an entertainment industry objective.
Biological screening of herbal drugs: Introduction and Need for
Phyto-Pharmacological Screening, New Strategies for evaluating
Natural Products, In vitro evaluation techniques for Antioxidants, Antimicrobial and Anticancer drugs. In vivo evaluation techniques
for Anti-inflammatory, Antiulcer, Anticancer, Wound healing, Antidiabetic, Hepatoprotective, Cardio protective, Diuretics and
Antifertility, Toxicity studies as per OECD guidelines
Introduction to AI for Nonprofits with Tapp NetworkTechSoup
Dive into the world of AI! Experts Jon Hill and Tareq Monaur will guide you through AI's role in enhancing nonprofit websites and basic marketing strategies, making it easy to understand and apply.
Model Attribute Check Company Auto PropertyCeline George
In Odoo, the multi-company feature allows you to manage multiple companies within a single Odoo database instance. Each company can have its own configurations while still sharing common resources such as products, customers, and suppliers.
2024.06.01 Introducing a competency framework for languag learning materials ...Sandy Millin
http://sandymillin.wordpress.com/iateflwebinar2024
Published classroom materials form the basis of syllabuses, drive teacher professional development, and have a potentially huge influence on learners, teachers and education systems. All teachers also create their own materials, whether a few sentences on a blackboard, a highly-structured fully-realised online course, or anything in between. Despite this, the knowledge and skills needed to create effective language learning materials are rarely part of teacher training, and are mostly learnt by trial and error.
Knowledge and skills frameworks, generally called competency frameworks, for ELT teachers, trainers and managers have existed for a few years now. However, until I created one for my MA dissertation, there wasn’t one drawing together what we need to know and do to be able to effectively produce language learning materials.
This webinar will introduce you to my framework, highlighting the key competencies I identified from my research. It will also show how anybody involved in language teaching (any language, not just English!), teacher training, managing schools or developing language learning materials can benefit from using the framework.
2. LEASING
Introduction:
• Leasing is distinguished from most other
forms of finance by the fact that the
financier (the lessor) is the legal owner of
the leased asset.
• The asset user (the lessee) obtains the
right to use the asset in return for periodic
payments (lease rentals) to the lessor.
2
3. Concept of Leasing
• Leasing, as a financing concept, is an
agreement between two parties, the
leasing company or lessor and the user or
lessee.
• The rentals are predetermined and
payable at fixed intervals of time,
according to the mutual convenience of
both the parties.
• However, the lessor remains the owner of
the equipment over the primary period. 3
4. Concept of Leasing
• Leasing is an important source of finance
for the lessee. Leasing Co. finance for:-
– Modernization of business
– Balancing equipment
– Cars and other vehicles and durables
– Assets which aren’t being financed by
banks/institutions.
4
5. Origin & Development of
Leasing
• Since WW II, the use of leasing has
been greatly expanded and is constantly
used for new products and new
industries.
• Henry Scholfeld set up US Leasing
Corporation with a capital of $20,000 in
May 1952.
• The concept of financial leasing was
pioneered in India during 1973, First
company was set up by Chidambaram 34
6. Legal Aspects Of Leasing
• The delivery of goods by one person to
another,
• For some purpose,
• When the purpose is accomplished, be
returned or otherwise disposed of
according to the directions of the person
delivering them.
• The person delivering the goods is called
the ‘bailor’ and
• The person to whom they are delivered is 6
7. Obligation For The Lesser And
Lessee
• The lesser has the duty to deliverthe
asset to the lessee,
• The lessee has the obligation to pay the
lease rentals as specified in the lease
agreement
7
8. Contents Of Lease Agreement
• Description of the lessor, the lessee, and
the equipment.
• Amount, time, and place of lease rental
payments.
• Time and place of equipment delivery.
• Lessee’s responsibility for taking delivery
and possession of the leased equipment.
• Lessee’s responsibility for maintenance,
repairs, registration, etc. 8
9. Contents Of Lease Agreement
• Lessee’s right to enjoy the benefits of
the warranties provided by the
equipment manufacturer.
• Insurance to be taken by the lessee on
behalf of the lesser.
• Variation in lease rentals.
• Option of lease renewal for the lease
period.
• Return of equipment on expiry of the
lease period. 9
13. Financial Lease
• A financial Lease is also known as Capital
lease, Long-term lease, Net lease & Close
lease
• Under a financial lease, the rate of lease
would be fixed based on the kind of lease,
the period of lease, periodicity of rent
payment, & the rate of depreciation &
other tax benefits available.
• The high cost of equipments such as
office equipment, diesel generators, 13
14. Framework of finance lease
• Lessee selects the equipment from the
manufacturer or distributor and negotiates the
terms of warranties, maintenance etc.
Delivery, installation, the price and terms of
payments.
• The lessor purchases the equipment either
directly from the vendor or from the lessee
following the delivery.
• Lessor retains ownership of equipment while
the lessee enjoys the use.
• The lease is for non-cancelable period, lessor
14
15. Operating Lease
• An operating lease is also known as service
lease, short-term lease or true lease.
• The lease is for a limited period may be in a
month, six months, a year or few years.
• Normally, the lease rentals will be higher as
compared to other leases on account of
short period of primary lease.
15
16. Framework Of Operating Lease
• Unlike in the case of financing lease, in an
operating lease, the lessor leases same
asset to different lessees successively
after the expiration of each contract.
• A single contract does not result in
recovery of the capital cost in full.
• This lease is usually for the period that is
significantly shorter than the economic life
of the equipment.
• This lease is subject to cancellation by
16
17. • The lessor also relies on the residual
value of the equipment to partly recover
his investment.
• In an operating lease, the lessor leases
the equipment to many lessees over the
equipments economic life.
• Operating lease, are usually confined to
equipments having an established used or
have an active second market
17
18. Leverage Lease
• A leverage lease is used for financing those
assets which require huge capital outlay.
• Asset has economic life of 10 years or more.
• The Lessor acquires the assets as per the
terms of the lease agreement but finances only
a part of the total investment, say 20%-50%
18
19. Cross Border Lease
• A vendor leasing is one where the retail
vendors tie up with the lease finance
companies which give financing option to
the customers of the vendors to purchase
a product.
• This type of lease is popular in auto
finance.
–Vendor Leasing
–Dry and Wet Leasing
19
20. Aircraft Leasing
• Wet lease
– Aircraft with complete crew,
maintenance and Insurance
– Lessee acts like air travel agent
– Rent is paid by hours operated
– Period of lease I from 1 to 24 Months
20
21. • Dry Lease
– Aircraft without crew, maintenance etc
– Typically used by Banks and Leasing
Companies
– Leasing period is more than 24 months
21
22. Problems of Leasing
• Unhealthy Competition
• Stamp Duty
• Delayed payments
• Bad debts
• Higher Fixed Cost per month
• Reduce return to Equity Shareholder
• Complex processing and Documentation
22
23. Advantages of Leasing
• Alternative use of funds
A leasing arrangement provides a firm
with the use and control over asset without
incurring huge capital expenditure.
• Fasterand cheapercredit
Acquisition of assets under leasing
agreement is cheaper and faster than any
other source of finance. 23
24. • Flexibility
Leasing arrangements may be tailored to the
lessee’s needs more easily than ordinary
financing. The lessee can utilize more funds for
working capital needs.
• Facilitates Additional Borrowings
Leasing may increase long-term ability to
acquire funds..
24
25. • No restrictive covenants
The restrictive covenants which are usually
imposed under debenture or loan agreement are
absolutely absent in a lease agreement.
• Hundred percent financing
Lease financing enables a firm to acquire the
use of an asset without having to make a down
payment. So, hundred per cent financing is
assured to the lessee.
• Boomto small firm
It is a boom to small firms and technocrats who
are able to make promoters contribution as
25
26. Disadvantages of Leasing
• Lease is not a suitable mode of project
finance
• Certain tax benefits/incentives such as
subsidy may not be available on leased
equipment.
• The value of real assets such as land and
building may increase during lease period.
In such a case, the lessee loses the
advantage of a potential capital gain.
• The cost of financing is generally higher
26
27. • A manufacturer who wants to discontinue a
particular line of business will not in a
position to terminate the contract except by
paying heavy penalties.
• If the lessee is not able to pay rentals
regularly, the lessor would suffer a loss
particularly when the asset is a sophisticated
one and less liquid.
27
28. Hire Purchase
Introduction:
• Hire Purchase is the legal term for a contract,
in which persons usually agree to pay for
goods in parts or a percentage at a time.
• When a sun equal to the original full price
plus interest has been paid, the buyer may
then exercise an option to buy the goods or
return the goods to the owner.
• The hire purchaser acquires the goods
immediately on signing the hire purchase
agreement but the ownership of the same is 28
29. Hire Purchase Act, 1972
• HP transactions are governed by the Hire Purchase Act
1972.
• The HP Act sets out the forms and contents of HP
agreements, the legal rights, duties, obligations of hirers
and financiers.
• The HP Act is administered by the Ministry of Domestic
Trade and Consumer Affairs.
• Hire purchase should be distinguished from installment
sale wherein property passes to the purchaser with the
payment of the first installment.
29
30. Development of hire purchase
in India
• In India, Hire purchase finance started
only after WW I.
• With the increase in economic activity,
many Non-Banking financing companies
entered the scene in the fifties and sixties.
30
31. Hire Purchase Agreement
HP agreements must be in writing and signed by both
the parties.
They must clearly lay out the following information:
• A clear description of the goods
• The cash price for the goods
• The HP price
• The monthly installments
• Rights to parties 31
32. Features Of Hire Purchase
• Possession of goods
• Each installment is treated as hire
charges.
• Ownership
• Default in the payment
• Terminate the agreement
32
33. Advantages Of Hire Purchase
• Spread the cost of finance
• Interest-free credit
• Higher acceptance rates
• Sales
• Debt solutions
33
34. Disadvantages Of Hire Purchase
• Personal debt
• Final payment
• Bad credit
• Creditor harassment
• Repossession rights
34
36. OWNERSHIP
LEASING
• In lease, ownership
lies with the lessor.
The lessee has the
right to use the
equipment and does
not have an option to
purchase.
• Leasing is a method of
financing business
assets only.
HIRE PURCHASE
• In hire purchase, the hirer
has the option to
purchase. The hirer
becomes the owner of the
asset/equipment
immediately after the last
installment is paid.
• Hire Purchase is a
method of financing both
business assets and
consumer articles. 36
METHOD OF FINANCING
37. DEPRECIATION
LEASING
• In Leasing, depreciation
and investment allowance
cannot be claimed by the
Lessor.
• The entire lease rental is
tax deductible expense.
HIRE PURCHASE
• In Hire Purchase
depreciation and
investment allowance can
be claimed by the Hirer.
• Only the interest
components of the Hire
Purchase installment are
tax deductible.
37
TAX BENEFITS
38. SALVAGE VALUE
LEASING
• The lessee, not being the
owner of the assets and
does not enjoy the
salvage value of the
assets.
• In Leasing the Lessee is
not required to make any
deposit.
HIRE PURCHASE
• The hirer, in purchase
being the owner of assets
and enjoy the salvage
value of the assets.
• In Hire Purchase, the
Hirer is required to
deposit 20% (or any other
amount a per agreement)
of the cost.
38
DEPOSIT
39. RENT-PURCHASE
LEASING
• In Leasing, the Lessee
take the asset on a rent
basis.
• Lease financing is
invariably 100%
financing. It does not
required any immediate
HIRE PURCHASE
• In Hire Purchase the
asset is purchased by the
Hirer.
• In Hire Purchase, a
margin equal to 20-25%
of the cost of the assets
to be paid the Hirer. 39
EXTENT OF FINANCE
40. MAINTENANCE
LEASING
• In Leasing, the
maintenance of leased
asset is the responsibility
of the Lessee.
• The leased assets are
shown by way of footnote
only.
HIRE PURCHASE
• In Hire Purchase, the cost
of maintenance of hired
assets is to be borne by
the Hirer himself.
• The assets on hire
purchase is shown in the
balance sheet of the Hire.
40
REPORTING