The financial services enable the producer to not only earn more profits but also maximize their wealth.One of the barometers of any economy is the presence of a vibrant capital market.
The term of such lease is much less than the economic life of the asset and thus the total investment of the lessor is not recovered through lease rental during the primary period of lease. Producers can avail various types of credit facilities for acquiring assets. In addition to the activity from paragraph 2 of … Lessee is responsible for the maintenance of asset.Lease financing suffers from the following disadvantagesAs ownership lies with the lessor, tax benefit is enjoyed by the lessor by way of depreciation in respect of leased asset.Leasing is a source of financing which is cheaper than almost all other sources of financing.In case of finance lease, the lessor can recover the total investment through lease rentals.Finance lease is non-cancellable and even if a company does not want to use the asset, lessee is required to pay the lease rentals.Lessor gets fixed amount of lease rental every year and they cannot increase this even if the cost of asset goes up.In case of finance lease, the lessor transfers all the risk and rewards incidental to ownership to the lessee without the transfer of ownership of asset hence the ownership lies with the lessor.5. Most of them are in the nature of non-fund based activity. It is here the financial services enable an individual to acquire or obtain various consumer products through hire purchase. A financial lease is a lease where the risk and the return get transferred to the lessee (the … Leasing appears to be a cost-effective alternative for using an asset.
The lease rental charged by the lessor during the primary period of lease is sufficient to recover his/her investment.Depending upon the transfer of risk and rewards to the lessee, the period of lease and the number of parties to the transaction, lease financing can be classified into two categories.
Leasing Options: Conserve Your Capital .
Finance lease and operating lease.Lease financing is one of the important sources of medium- and long-term financing where the owner of an asset gives another person, the right to use that asset against periodical payments. Even under stiff competition, the producers will be in a position to sell their products at a low margin.
Financial Services notes on Different Types of lease in Leasing - Leverage lease, Sale and Lease back, Difference between Financial and Operating Lease