What are the different types of leases ?

When you take a place on lease in exchange for a monthly rental payment, you are considered to be living on rent. There are different rules, regulations, and laws for various types of leasing. Each type has a specific arrangement that needs to be followed by the tenants and the landlord. Keep reading to know interesting information about the same.

There are more than nine types of leases known to man. To simplify things, only three of them are considered to be major.

1. Finance leasing :

This is a long-term lease. It is done based on the expected life cycle of the machine or equipment. There are also types of leasing in financial services. Though, most of the lease is usually for a period of three years. After which, a nominal rent is paid or the machine is split into scraps and sold off. Leasing companies rent their machines to recover the cost, and charges of the equipment. It is the tenant that maintains and holds responsibility for the machine in its rental period.

1. Operating leasing :

In this type of lease, the leasing company rents the machine for a limited period of time. Once the lease is over, the asset (machine) is taken by the company. The advantage of this method is that the maintenance of the machine during the rental period is handled by the leasing company.

1. Contract hire

This is the most famous type of lease available for people. Here, the leasing company gives the asset for rent on the basis of a contract. eg. company cars. All the repairs, services, management, and more are handled by the company. The tenant does not need to show the rental asset on their yearly balance sheet as well. 

Commercial and Residential leases are usually seen in property and not in assets. To know what are the different types of commercial leases. You can read the answers linked below. Other types of leases are :

• Full and non-pay-out lease.

• Specialised service lease.

• Net and non-net lease.

• Sale and leaseback.

• Triple Net Lease

 This is all from my end on various types of leasing.

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