Leasing |
|
Back to Investment Strategies Menu Leasing, as an investment strategy?, surely leasing should be seen a method of purchasing plant and machinery?. This is not always the case, by freeing up cash through not purchasing equipment in one go, means the money can be used by a business in other ways. The basic premise of a lease is that it allows for a business to use plant and machinery as it were their own property, however the business has to pay the owner of the plant and machinery a fee for using the equipment. The owner of the plant and machinery is known as the 'Lessor', whilst the business renting the equipment is known as the 'Lessee'. There are two basic categories of leasing: FINANCIAL LEASE - Rather difficult to explain, in essence involves the rights of ownership being transferred from say the lessor to the lessee. Financial leases work in the form of contractual arrangements where the lessor will aim to get the cost of the equipment, its resale value, rental costs and interest accrued to be combined into a fixed term/fee arrangement with lessee. OPERATING LEASE - In essence a rental arrangement, a fee paid for the use of plant and machinery, with no rights of ownership given.
Back to Investment Strategies Menu |
(c) eCommerce-Now.com Est 08/00 - Last Updated 28/05//2001 |