leasing

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Lease

An agreement between two parties whereby one party allows the other to use his/her property for a certain period of time in exchange for a periodic fee. The property covered in a lease is usually real estate or equipment such as an automobile or machinery. There are two main kinds of leases. A capital lease is long-term and ownership of the asset transfers to the lessee at the end of the lease. An operating lease, on the other hand, is short-term and the lessor retains all rights of ownership at all times.

leasing

the hiring out by one firm (the lessor) of an ASSET such as a factory building, piece of machinery or vehicle to another firm (the lessee) in return for the payment of an agreed rental. The lessor retains the ownership of the asset concerned and will repossess the asset on the expiry of the contract, or beforehand should the client require a replacement. A leasing arrangement can be useful to a client company in so far as it enables it to employ assets without having to tie up large amounts of capital for long periods of time. See LEASE, LEASEBACK, OFF-BALANCE SHEET FINANCING, FINANCE HOUSE.

leasing

the purchase of an ASSET (mostly buildings, machinery and vehicles) by a leasing company which retains the ownership of the assets and which then hires out the item for use by clients who pay an agreed RENT. Leasing is a useful source of INVESTMENT insofar as it enables individuals or companies to use assets without having to tie up large amounts of capital. See LEASE, OFF-BALANCE SHEET FINANCING.