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 others.
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.
