Which of following statement is correct about Leasing 1 It is a rental agreement that extends for a ...........

Finance (Phase -I & II) Alternate sources of finance

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Which of following statement is correct about Leasing?

1. It is a rental agreement that extends for a year or more and involve fixed monthly payments

2. It is an agreement between two parties – the user (lessee) and the owner (lessor).

only 1

only 2

Both 1 and 2

Neither 1 nor 2

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Explanation:

Leasing (Asset based Lenders)-

1. It is a rental agreement that extends for a year or more and involve fixed monthly payments.
2. It is an agreement between two parties – the user (lessee) and the owner (lessor). The lessor grants the lessee right to use the property of the lessor for a defined period. The lessee just has the rights to use but does not have the ownership rights.
3. In return Lessee agrees to pay series of fixed payments to the lessor. Lessor is also called Asset based lender in this case.