The commercial lease is an agreement between the landlord and the business for the rental of the property.
Usually, the businesses prefer renting than to purchasing as it requires least capital. Due to more complications in the commercial agreements than residential one.
So, it’s always better, before signing the commercial lease, to understand their terms, which normally includes rent amount, rent increases, security deposit, improvements, description of the property and signature etc.
There are different kinds of lease arrangements. It makes sense to consider them all to see which is best suited to your business, your particular circumstances and the asset that you are acquiring. And, in the event you’re looking to lease medical equipment, comparing cost factors can make all the difference. Summing up, listed above are the different types of lease, which are popular. Expect that the article would have provided you with the knowledge about different types of lease. If you think some things have been missed out or you want to share your views regarding this topic, so please do share it with us in the comment box given below.
TYPES OF LEASING
TYPES OF LEASING
There are two main types of lease which are being used in Pakistan:
Financial Lease
A lease is classified as a finance lease if it transfers the ownership of assets to the lessee. The example of finance lease may be the car lease in which lessee makes periodic payments to the lessor and after a specific period of time say after five years, the possession of car is transferred to the lessee.
Operating Lease:
In operating lease, the asset is provided to the lessee by the lessor to use that for specific period of time. At the end of that period, the asset is returned by the lessee to the lessor and it remains the property of lessor.
Normally, the lease term is short compared to the useful life of the asset or piece of equipment being leased. For example, an aircraft which has an economic life of 25 years may be leased to an airline for 5 years on an operating lease.
Ijarah:
Ijarah is an Islamic form of lease in which the lessor gives the right to the lessee to use the asset for specific period of time against payment of lease rentals. At the end of the lease term, the lessor may transfer the ownership of asset to the lessee.
All type of assets raging from home appliances to heavy machinery to commercial buildings can be leased under finance/operating lease and Ijarah.
