Leasing refers to an owner, or lessor, selling use of his property (equipment, automobile, home, or business) to a lessee.
For many individuals, leasing is a good alternative to buying because leasing requires less equity and, therefore, more people have the qualifications to lease than to buy.
For example, a $1 million piece of property may be too expensive for a business to purchase, so they lease it for $5,000 per month, which they are able to do with the profits they make.
Having the latest high-tech equipment is crucial for an IT company, so they may lease the best computers and have a continuing upgrade in their contract.
This is much more cost-effective than regularly having to purchase the
latest model, especially because computers are constantly being improved
upon and the older ones become obsolete in no time.
Many other types of equipment, such as those used in construction, entertainment, weddings, and offices are typically leased to the user.
Bulldozers, loaders, graders, and cranes are just some of the equipment needed when constructing a new building.
If the building owner bought these items for the temporary use needed, he would spend hundreds of thousands of dollars needlessly.
By leasing the machines, he is paying less and also being guaranteed service, repair, and maintenance on them.
Equipment rentals are a big part of the entertainment industry, from a child’s birthday party to huge corporate events.
Many parents lease massive waterslides, cotton candy machines, and “moon walks” to enhance their child’s party.
Corporations trying to impress clients host big blowouts complete with extravagant light shows, live broadcasts, and other huge presentations, all requiring leased equipment.
Weddings and bat/bar mitzvahs are
other big sources of leasing needs. These events often require large
amounts of silverware, linens, tables and chairs.
Some even opt to have huge tents erected for their event, another leased product. A wedding typically has five or more vendors, all providing various leased services, such as catering, supplies, and music for the event.
Business offices must supply their workers with adequate equipment required to produce a huge amount of paperwork and computer files.
Machines such as computers, printers, scanners, copiers, and fax machines are often leased because the lease contract provides the lessee with service and maintenance.
Many contracts also include supplies, upgrades, and installation, all of which would be too expensive to buy individually.
Leasing is much more cost-effective than buying in many of these situations.
Another item that is frequently leased is the automobile.
There is a lot of debate over whether it is better to lease or buy a car.
On the one hand, the lessee gets the best years of the automobile’s life at a slightly discounted price.
But, of course, the buyer is able to sell the car at the end of its run, unlike the lessee, who must return it to the owner for no monetary return.
Homes, such as houses, mobile homes, and apartments, are very often leased.
This is a great option for a person who is trying to save money for a down payment on a home.
It is also a good way for homeowners to profit without selling their property.
Many people make their entire earnings from the process of buying
dilapidated homes, refurbishing them, and leasing them as homes to
Business leasing works similarly to home leasing.
A person or company will buy a strip mall and lease each of the storefronts to different businesses, focusing on what sort of businesses will do well in the community and offering a variety of services on the property.
The business owner would rather lease the store than buy it, because it is less expensive and the landlord will handle all service and maintenance of the building.