Archive for August, 2009

Benefits of Leasing

Wednesday, August 12th, 2009

The evident benefit of leasing is the use of an asset without paying a large sum of initial cash. A lease regularly requires no down payment, while loans frequently do. A lease doesn’t restrict company’s monetary operations, while loans often do. A lease distributes payments over a longer period than loans permit and secures protections against the risk of machinery wear-out, since the lessee can dispose of the machinery at the end of the lease. Lease payments are deducted as operating expenses if the arrangement is a true lease. Leasing has another advantage that the leasing firm can ensure specialist technical advice based on experience with the leased machinery.
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Types of Leases

Wednesday, August 5th, 2009

There are three main types of leases: the financial lease, the operating lease, and the sale and leaseback. Financial leases are most general. Financial lease provides that periodic payments be made. Ownership of the machinery reverts to the lessor at the end of the lease term. The given lease couldn’t be canceled and the lessee has a legal obligation to continue payments to the end of the term, and the lessee agrees to maintain the machinery. The operating lease could regularly be canceled under terms written in the lease contract. Maintenance of the asset is generally the responsibility of the lessor. The sale and leaseback is same as the financial lease. The owner of an asset sells it to another person and at the same time leases it back to use it for a specified period of time.
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