PRESENTERS -

Abhinav pandey
Sourav maity
Shubhra jha
pankaj kumar
Manoj sharma
Neelava
 HIRE PURCHASE

 It is also called closed ended leasing.

 It is an agreement for hire, with an option to purchase.

After all the payments have been made, the business customer
becomes the owner of the equipment.

The business customer is normally responsible for maintenance

of the equipment.
 STANDARD PROVISIONS
To be valid, HP agreements must be in writing and signed by both part parties.
They must clearly set out the following information in a print that
all can read without effort:

1) A clear description of the goods

2) The cash price for the goods

3) The HP price, i.e., the total sum that must be paid to hire and then purchase the
goods

4) The deposit

5) The monthly installments

6) The right of the hirer to terminate the contract when he feels like doing so with
a valid reason.
1) If the hirer fails to pay any particular instalment.

2) The owner can terminate the contract and take away the goods.

3) The ownership continues to remain with the owner.

HP INSTALLMENTS COMPRISE OF
THREE ELEMENTS

1. Normal trading profit

2. Finance charge

3. Recovery of cost of goods/assets

 BENEFITS

A hire purchase allows a person to buy an item , such as a house,

over a long period of time. With such an agreement, the buyer can
enjoy his property while making payments. The buyer also has the
right to sell the property and allow the new purchaser possession of
his house
 CONSIDERATIONS
1) Generally, a person must be at least 18 years of age to enter into
a valid hire purchase.

2) There is no upper age limit to incurring such a purchase

agreement.

3) Each person should carefully consider his financial position

before incurring any type of hire purchase.
LEASING
 A lease is an agreement allowing one party to use another’s property,
plant , or equipment for a stated period of time in exchange for
consideration.

A lease agreement involves at least two parties a lessor (such as a

bank), who owns the property, and a lessee, who uses the property.
Types of lease:
 FINANCIAL LEASE
 Long-term, non-cancellable lease contracts are known as financial leases.

 Covers the whole useful life of the of assets .

 Lease rents are lower

The lease agreement is irrevocable.

 OPERATING LEASE
Lease period is for short time period generally less then useful life of
asset.

 This lease agreement gives to the lessee only a limited right to use
the asset.
 The lease agreement is revocable at a short notice.

 Mines, Computers hardware, trucks and automobiles are found

suitable for operating lease because the rate of obsolescence is very
high in this kind of assets.
 SALE AND LEASE BACK
 The owner of an asset sells the asset to a party (the buyer),who in
turn leases back the same asset to the owner in consideration of lease
rentals.

 Under this arrangement, the assets are not physically exchanged but
it all happens in records only. This is nothing but a paper transaction.

 Transaction is suitable for those assets, which are not subjected

Depreciation but appreciation, say land.

Equipment Leasing requires that the equipment be purchased within

90 days
Structure of a Sale and Leaseback:
 LEVERAGED LEASING
Under leveraged leasing arrangement, a third party is involved beside
lessor and lessee.
 DIRECT LEASING
 Under direct leasing, a firm acquires the right to use an asset from
the manufacturer directly.

 The ownership of the asset leased out remains with the manufacturer
itself.

The major types of direct lessor include manufacturers, finance

companies,independent lease companies, special purpose leasing
companies etc.
 BENEFITS OF LEASING:

1) You do not need large sums of cash to acquire equipment.

2) The rental you pay is fixed,it easier to draw up a budget and

project your cash flow.

3) By leasing, the responsibility of maintaining and servicing the

equipment falls on the person renting the equipment to you.

4) You can always rent the latest and most advanced equipment
or assets as and when you need them.
Is Equipment Leasing The Right Choice?
When Is Hire Purchase A Better Option?

When Is Leasing A Good Option?

Is Finance Lease a " Sale " for the purposes of Sales Tax ?

Is Hire Purchase a Sale for the purposes of Sales Tax ?

Where to Find a Business Equipment Lease Company?

Thank You