Paying cash for an asset can be a significant drain on your working capital; leasing the asset however gives you access to the asset without paying for it all at once.
All forms of leasing are basically rental agreements giving the you (the lessee) the right to use an asset owned by the lessor (the lease finance company) for a specific period of time in return for regular payments (rental payments).
In theory, it is possible to lease almost anything, from equipment valued at a few thousand pounds to assets worth millions. Leasing contracts are flexible and can be tailored to the specific needs of the client.
There are many types of leasing but, fundamentally, all fit one of two categories:
Direct Lease
The client identifies the asset (and negotiates the price) and arranges for the leasing company to buy it from the manufacturer (if new) or the previous owner (if used) to rent it to them.
Sale-and-leaseback (also called purchase leaseback)
The client sells an asset they already own to the leasing company for fair market value or book written down value (whichever is less) and then will lease it back.
