Pros And Disadvantages Of Leasing

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Leasing is the specialized mode of acquiring equipment without ownership. It is an alternative to ownership and supports in obtaining funds when other sources are either exhausted or are not feasible and thus a viable tool for maximizing the profits of a corporate entity. Entrepreneurs prefer leasing because it enables them to acquire equipments and make regular payment through earnings generated from use of such leased equipment. Leasing is highly beneficial if the equipment can generate additional earning over and above the lease rental. Thus, leasing is the most popular method of financing and is in the growth finance sector. The lessor will be able to gain from such lease in the amount of tax reduction call a tax shield that a company…show more content…
Both the parties must be satisfied on the conditions. If lessor and lessee are not satisfied upon conditions then the “Offer to Lease” becomes null and void and the parties have no further legal obligation to each other. 2.3.3 Determining if “ Offer to Lease” conditions are met : The lessor and lessee make an attempt to satisfy all the conditions outlined in the “Offer to Lease” agreement before specified dates. If the conditions are met, the parties move to the lease stage. 2.3.4 Drawing up the lease : The lease contains all the terms of the lessor and lessee relationship. It is based on terms established and agreed upon in the “Offer to lease”. The lessor draws up the lease at his expense and presents it to the lessee for review, agreement and execution, which identify the following: a) The basic lease period and the condition for non – cancellation of lease agreement. b) The timing and amount of periodical rental payment during the basic lease period. c) An option to renew the lease or purchase the asset at the end of the basic lease period. d) Particulars relating to payment of cost of maintenance, repairs, taxes, insurance and other

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