Lease Financing

Lease financing is one of the important sources of medium- and long-term financing where the owner of an asset gives another person, the right to use that asset against periodical payments. The owner of the asset is known as lessor and the user is called the lessee.

The periodical payment made by the lessee to the lessor is known as lease rental. Under lease financing, lessee is given the right to use the asset, but the ownership lies with the lessor and at the end of the lease contract, the asset is returned to the lessor, or an option is given to the lessee either to purchase the asset or to renew the lease agreement.