Bank Theory

Equipment Leasing / Lease Financing - Bank Theory Equipment Leasing / Lease Financing Meaning of a Lease A lease is a contractual agreement whereby the owner of an asset (lessor) permits another party (lessee) to use the asset for a specified period in return for periodic payments (lease rentals). Features of a Lease Involves two parties – lessor and lessee Asset ownership remains with the lessor Lessee pays lease rentals for using the asset Can be short-term or long-term Termination conditions are pre-agreed Types of Leases Finance Lease: Long-term, non-cancellable lease transferring most risks and rewards of ownership. Operating Lease: Short-term, cancellable lease where the lessor bears the risk and reward of ownership. Sale and Leaseback: Seller sells the asset and leases it back from the buyer. Leveraged Lease: Involves th...