fee-cher

Leasing: A written agreement under which a property owner allows a tenant to use the property for
a specified period of time and rent.

Lessee: (person taking out a lease) agrees to pay a number of fixed or flexible installments over an
agreed period to the lessor

Lessor: The person who rents land or property to a lessee. Or so know landlord

Outlay: An expending of money

Lump sum: A single payment for the total amount due, as opposed to a series of periodic payments

Tenant: a person or group that rents and occupies land, a house, an office, or the like, from another
for a period of time; lessee

Lease: is a contact between the owner of an asset (the lessor) and the party desiring to use that asset
(the lessee). The lease general provide some terms like the lessor allows the lessee unrestricted right
to use the asset during the lease term, and that the lessee should agrees to make periodic payment
to the lessor and to maintain the asset

Types of leasing : financial or capital leasing. Operating lease, Sale and leaseback, levareged leasing,
and Direct Leasing.

The lessee (customer or borrower) will select an asset (equipment, vehicle, software);The lessor
(finance company) will purchase that asset; The lessee will have use of that asset during the
lease; The lessee will pay a series of rentals or installments for the use of that asset; The lessor
will recover a large part or all of the cost of the asset plus earn interest from the rentals paid by the
lessee; The lessee has the option to acquire ownership of the asset (e.g. paying the last rental, or
bargain option purchase price); The finance company is the legal owner of the asset during
duration of the lease. However the lessee has control over the asset providing them the benefits
and risks of (economic) ownership

Operating Lease: Is the contraste of financial lease..

Sale and leaseback: here its like a sub-parte of financial leasing where the owner of an asset
sells the asset to a party (the buyer) who in turn leases back the same asset to the owner in
consideration of lease rental. The seller assumes the role of a lessee and the buyer assumes
the role of a lessor. The seller gets the agreed selling price and the buyer gets the lease rentals.

Lavareged leasing: A third party is involved beside lessor and lessee.The lessor borrows a
part of the purchase cost (say 8 0 %) of the asset from the third party i.e., lender The asset so
purchased is held as security against the loan. The lender is paid off from the lease rentals
directly by the lessee and the surplus after meeting the claims of the lender goes to the lessor
A leaseback can be beneficial for the buyer and seller alike. The seller attains a lump sum of cash
quickly and the buyer acquires a lower than market value purchase price, along with a long-term
lease at a premium rate. The lease amount provides periodic income and may even be enough to pay
the buyer's mortgage, if he or she borrowed money to obtain the property. A leaseback can be a
great investment tool, one that yields a high return. As with any investment, however, there are
associated risks.

Some leaseback arrangements allow the seller, or current lessee, the option to buy back the property
at a future date. During the life of the leaseback, however, the buyer derives tax benefits from the
arrangement, such as being credited for depreciation of the property. If the seller exercises the
option of buying the property back, all rights will revert to the seller upon closing the transaction, so
setting the sale for the end of the tax year is a convenient way to keep things straight for the Internal
Revenue Service. This is important, because if either party is audited during the leaseback, both can
experience problems that range from minor inconveniences to very costly dilemmas.

If the seller files bankruptcy or is audited, and the IRS or bankruptcy court believes that the seller
arranged the leaseback to hide assets, the transaction can be reclassified. Ownership of the property
will be credited to the original owner, and the property may be confiscated in order to resolve tax
liens or arrears to other creditors. In this case, the buyer could lose a great deal of money, so caution
is advised when considering a leaseback agreement.