2% Central Brokerage


What Is Leasing?

A Lease can be defined as a contract where a party being the owner (lessor) of an asset (leased asset) provides the asset for use by the lessee at a consideration (rental), either fixed or dependent on any variables, for a certain period (lease period), either fixed or flexible, with an understanding that at the end of such period, the asset, subject to the embedded options of the lease, will either be returned to the lessor or disposed off as per the lessor’s instructions.

In simpler terms a lease is a contract outlining the terms under which one party agrees to rent an asset—in this case, property—owned by another party. It guarantees the lessee, also known as the tenant, use of the property and guarantees the lessor (the property owner or landlord) regular payments for a specified period in exchange. Both the lessee and the lessor face consequences if they fail to uphold the terms of the contract. A lease is a form of incorporeal right.

Leasing is nothing more than a method of paying for the use of an asset over a specified period of time. Though it seems very similar to the concept of renting, they are very different.

Benefits Of Leasing

1. It allows individuals and businesses to acquire assets without the upfront costs typically associated with purchasing. Instead, lessees make regular payments over a fixed term, typically between two and five years. These payments are typically lower than loan payments, making leasing an attractive option for those who want to preserve cash flow.

2. It allows individuals and businesses to stay up-to-date with the latest technology and equipment. Leasing terms are often shorter than the lifespan of the assets being leased, which means that lessees can easily upgrade to newer, better models at the end of the lease term. This can be particularly helpful for businesses that need to stay competitive by using the latest equipment.

Disadvantages Of Leasing

1. lessees do not own the assets they are leasing and may be subject to restrictions on use, maintenance, and modifications.

2. Lessees may also be responsible for additional fees and penalties if they fail to meet the terms of the lease agreement.