financing is an important part of trading banks' business. It is a
method of financing with a lease agreement instead of a loan.
specialist form of lease financing for real estate but lease
financing is available for most high cost items of plant, and
equipment. Items are specifically selected for the use of the
bank cannot purchase items as stock and then lease to clients. Most
agreements allow the lessee to buy the item at residual value at the
expiration of the lease term. Two important advantages of lease
- the total rent
is tax deductible whereas only the interest part of the payment is
allowable for the normal loan.
- the lessee
minimises loss through depreciation.
lessee may or may not have a right of ownership of the leased
property at the end of the lease.