Lease and Types of Lease

Q. What is Lease?

A contract under which one party, the Lessor (owner) of an asset agrees to grant the use of that asset to another, The Lessee (user), in exchange for periodic rental payment. It is a contractual agreement between the two parties whereby one acquires the right to use the property and the other who allows the former the right to use his owned property.

Types of Lease: Essentially there are two types of leasing:

(a) Equipment Leasing; 

(b) Real Estate Financing;

Equipment Leasing are two types:

(a) Financial Lease (also called lease financing); 

(b) Operating Lease (also called Service or Non-pay-out lease)

Financial Lease is two types:

(a) Primary Lease; 

(b) Secondary Lease;

Operating Lease is two types:

(a) Simple operating lease; 

(b) specialized Service Operating Lease;