CORPORATE FINANCE

NAME UMAIR
ROLL NO F20-BBA-1033
CLASS BBA(morning)
Submitted to Ms. Aisha Riaz
WHAT IS LEASE ?

Lease is a contract whereby the owner of an asset grants the other party the exclusive right to
use the asset for an agreed period of time in return for payment of rent.

• The owner of the asset is known as lessor and the user is called lessee.
• The periodical payment made by the lessee to the lessor is known as lease rental.
• Under lease financing, lessor is given the right to use the asset but the ownership with the
lessor and at the end of the lease contract, the asset is returned to the lessor or option to
renew the lease agreement.
 Features of Lease Financing

• Contract: A contract is entered into by 2 parties under lease financing involving an owner
and user.
• Term of lease: Term of lease refers to time period for which agreement of lease will
remain in operation.
• Rental payments: Rental payments are regular payments made by lessee to lessor for
getting the right of using an asset or property. It is amount paid for lease transaction and
therefore also called lease rental.
• Renew or purchase option: Once the contract gets terminated, there are 2 options
available which are renew or purchase option.