Leasing ryps of leasing

Different Types of Lease

• Different Types of Lease
• 01. Financial Lease or Capital Lease
• It is a lease which involves payment for a longer period of time.
• The amount paid to the lessor by the lessee is more than the actual cost of the property in the form of lease charges, as it will include interest over a long period of time.
• All the costs are borne by the lessee and the lessor does not render any service.
• 02. Operating Lease
• In this lease, there is a use of an asset or property for a specific period of time usually for a short duration.
• In this lease, all the expenses are borne by the lessor and he will not be able to realize the full cost of the property.
• The lessor bears the risks of non-use of the asset and incident-related risk.
• This type of lease is preferred when the asset, property or equipment is likely to be remain unused for a longer period of time.
• From both the parties, either party has the option to terminate the lease after giving notice.
• 03. Conveyance Type Lease
• This lease is generally for a longer period of time with an intention of transferring the title of the ownership to the lessee.

04. Leveraged and Non-Leveraged Lease

• 04. Leveraged and Non-Leveraged Lease
• There may be situation when the value of the asset which is leased, is quite a huge amount which may be difficult or impossible for the lessor to finance.
• So, in this case the lessor includes one more financier who will also charge over the leased asset.
• 05. Tax-Oriented Lease
• A lease will be considered as a tax-oriented lease, where the lease is not a loan on security but it qualifies as a lease, for availing some tax benefits to either or both the parts.

06. Non-Payout and Full Lease
In case of non-payout lease, the same asset is leased over and over again by the lessor due to non-payment. While in case of full lease, the full value of the leased asset is recovered by the lessor by the way of leasing.