Leasing is a long-term lease of property with the option to buy it when the contract expires. That is, instead of buying property outright, a business leases it, uses it and pays its cost in installments.
At the end of the contract, he can return the property back or pay the remaining part of the cost and register it as property.
Leasing is suitable for entrepreneurs who need expensive equipment or special equipment for work, but they are not ready to pay the entire amount at once or take out a loan from a bank.
Let’s say a farm owner needs new tanks for cooling and storing milk. It takes a long time to get a loan, but you need equipment urgently. A farmer turns to a leasing company. She buys tanks and leases them to the farmer – for example, for three years. Conducting such a transaction – from submitting an application to installing tanks on the farm – takes several days.
Over the next three years, the farmer uses the equipment and pays lease payments – the cost of the tanks and interest to the leasing company. After three years, he can buy back ownership of the equipment and become its owner.
Individuals can also lease property for personal use. But in most cases, the overpayment will be higher than with a loan.
