Lease and Hire Purchase
SYMBIOSIS LAW SCHOOL, PUNE
Constituent of Symbiosis International University, Pune
(Accredited by NAAC (UGC) with `A’ Grade)
Managerial Economics Internal Assessment
REPORT ON
‘LEASE AND HIRE PURCHASE COMPANIES’
Submitted by
SIVAGNANAM KARTHIKEYAN
ROLL NO: 135
DIV ‘B’
BBA. LLB. BATCH 2013-18
LEASING
A lease transaction is a commercial arrangement whereby an equipment owner or Manufacturer conveys to the equipment user the right to use the equipment in return for a rental. In other words, lease is a contract between the owner of an asset (the lessor) and its user (the lessee) for the right to use the asset during a specified period in return for a mutually agreed periodic payment (the lease rentals). The important feature of a lease contract is separation of the ownership of the asset from its usage. Lease financing is based on the observation made by Donald B. Grant:
“Why own a cow when the milk is so cheap? All you really need is milk and not the cow.”
Leasing industry plays an important role in the economic development of a country by providing money incentives to lessee. The lessee does not have to pay the cost of asset at the time of signing the contract of leases. Leasing contracts are more flexible so lessees can structure the leasing contracts according to their needs for finance. The lessee can also pass on the risk of obsolescence to the lessor by acquiring those appliances, which have high technological obsolescence. Today, most of us are familiar with leases of houses, apartments, offices, etc.
Two important categories of leases are: Operating Leases and Financial Leases.
Operating leases are short term, cancellable leases where the risk of obsolescence is borne by the lessor. Financial leases are longterm, non-cancellable leases where any risk in the use of the asset is borne by the lessee and he enjoys the returns too.
The other sub-parts of finance lease are: sale and lease back and leveraged financing. Under
Constituent of Symbiosis International University, Pune
(Accredited by NAAC (UGC) with `A’ Grade)
Managerial Economics Internal Assessment
REPORT ON
‘LEASE AND HIRE PURCHASE COMPANIES’
Submitted by
SIVAGNANAM KARTHIKEYAN
ROLL NO: 135
DIV ‘B’
BBA. LLB. BATCH 2013-18
LEASING
A lease transaction is a commercial arrangement whereby an equipment owner or Manufacturer conveys to the equipment user the right to use the equipment in return for a rental. In other words, lease is a contract between the owner of an asset (the lessor) and its user (the lessee) for the right to use the asset during a specified period in return for a mutually agreed periodic payment (the lease rentals). The important feature of a lease contract is separation of the ownership of the asset from its usage. Lease financing is based on the observation made by Donald B. Grant:
“Why own a cow when the milk is so cheap? All you really need is milk and not the cow.”
Leasing industry plays an important role in the economic development of a country by providing money incentives to lessee. The lessee does not have to pay the cost of asset at the time of signing the contract of leases. Leasing contracts are more flexible so lessees can structure the leasing contracts according to their needs for finance. The lessee can also pass on the risk of obsolescence to the lessor by acquiring those appliances, which have high technological obsolescence. Today, most of us are familiar with leases of houses, apartments, offices, etc.
Two important categories of leases are: Operating Leases and Financial Leases.
Operating leases are short term, cancellable leases where the risk of obsolescence is borne by the lessor. Financial leases are longterm, non-cancellable leases where any risk in the use of the asset is borne by the lessee and he enjoys the returns too.
The other sub-parts of finance lease are: sale and lease back and leveraged financing. Under