Generally when we say lease, it means a contact between the lessor and the lessee. Under this contract the lessor will grant the permission for lessee the right to use the particular good for a particular period of time. Most of the times this method has been used by the people who doesn’t have the capacity to purchase such goods. Especially most of the middle class and lower class people prefer this method to get the temporary ownership of expensive goods. When a contract created between the lessor and the lessee, then it will be laid down in the written document, which is known as lease agreement. This agreement gives legal validity to that contract and it contains all the important terms and conditions of that contract. Also if there any issues between the lessor and the lessee then the issue would go before the courts and the court make decisions according to the contractual agreement. Because the duration of the lease and the rental charges for the goods are included in that agreement.
The lease can be done in two methods, one is long term leases and the short term leases. When we are saying leases, generally it’s a way of financing the purchase of properties which is normally have a high cost. For example, land leasing, vehicle leasing and other properties or assets leasing etc. moreover this leasing methods have used by corporate sectors also because when they can’t fully invest on any asset or property they prefer this leasing method to temporarily own that product. Generally corporate sectors use this method of leasing for, corporate land leasing, corporate car leasing, machinery and equipment leasing etc.
There are so many rental companies are in our society, which also work similar to the leases. Under this rental method we pay a rental charges for the period which we used that particular asset. Most of the times we can see this method used in the cheap car rental in Singapore, machinery rental services and other rental services etc. Generally this rental methods will only be applicable in the short term period. However under the lease methods we have both the long period loans and short period loans.
Also, during the lease the lessor expected to deliver the goods in proper condition and receive the payments from lessee. At the same time the lessee expected to make the payment without any delay and renew the lease contract at the expiration of the contract. A lease gives benefits to either parties.