What You Need to Know Before Leasing


Whether you are a corporation or an individual, there are ways to finance your asset depending on your preference, experience, estimated usage, requirements, financial options, restrictions, and availability. If you are confused about the whole process of leasing, you may want to look into services of a reliable and experienced business or personal coach who can navigate through your personal preferences and needs.

Leasing makes an asset or assets available to you, for a regular rental for a minimum period. It is an agreement between the lessor (owner of the asset) and the lessee (the one renting that asset). Besides, it is a legal contract with obligations and rights agreed upon by both parties.

Leasing – Who is the Lessee and the Lessor

When talking about leasing, the lessee is the person who is purchasing or renting the asset. The lessor is the person who owns the asset or maybe a supplier or the manufacturer. However, the lessor is equally independent.

1. Manufacturer or supplier bases lessors are usually in the business of guiding their parent firms in the sales of such assets along with the replacement of those assets.

2. Independent lessors are the ones who operate as residual value takers in tools such as IT, medical, vehicle, etc. with a view to recycling, remarketing, or retiring the assets at expiry. They are known to specialize in specific types of assets.

3. Banks and other financial organizations provide leasing to their buyers as an additional avenue in terms of borrowing. Although more like a bank loan, the difference is that the investment is safe against the assets and can result in advantageous prices.

As stated, lessees tend to be the user of the asset; however, in return, they may have the need and ability to sub-lease the asset to the sub-lessee. It can be a case for the operations providing short-term rental of some IT tools.

Lease contracts and agreements

Just like most of the other agreements, lease contracts are between two parties, which legally bind both sides with several documents that are equally important in the particular areas of dispute. The type of lease and the fair terms are paramount by choosing the right lessor.

To get the help that you need you may want to get the help of an experience NNN broker. They have connections and experience for a fair rental. The option of ending the lease will be documented and understood along with the extensions, buyouts, and returns.

Documents You Will Need for Leasing

The type of documents that you will come across is as follows:

Master agreement

The material on which the two parties will agree upon is known as the master agreement. It consists of the standard terms and conditions between the lessor and the lessee.

 Equipment scheduling

It will likely detail the length of the lease generated for each transaction under the master agreement along with the payment schedule, the intended start date, and the equipment details.

Acceptance certificate

This document is to be filled by the lessee after he gets the equipment with complete satisfaction.

Now let’s come to another important factor in deciding your lease.

Types of lease

There are certain types of contracts, depending on particular conditions.

Operating lease

In this case, the lessor retains the asset’s economic ownership and its title. The rental will be committed to liabilities for the payments and will be accorded a right of use asset. The rent that you are going to pay will reflect the value of the equipment at the marked expiry date of the lease.

Specially linked with the aircraft and vehicles, and other types of contracts demonstrate the terms of need of a business for a particular asset.

In the finance lease

The lessor buys the asset and transfers economic ownership of the lessee. From the lessee’s point of view, this is like a bank loan and is treated accordingly as an asset, which is depreciated with the associated contingent liabilities.

Besides leasing, there are other ways to get assets. You can do it by hiring any purchase or outright purchase.