Leasing is an agreement concluded between a minimum of two entities. The parties to the leasing are the lessor and the lessee. We can also meet the lease subject which is the seller. The lease agreement, under pain of nullity, is concluded in writing. As a rule, it is concluded for a definite period. The parties to the lease agreement decide most often about the period for which they are concluded. Through a leasing contract, the lessor or financing party transfers the right to use the item to the other party to the contract. Throughout the period of the leasing contract, the financing party is the owner of the leased object. The lease agreement does not transfer ownership of the item, but only the entity that owns it gives the other entity the opportunity to use the item. Only after the end of the lease agreement period does the lessee have the right to finally purchase the item. In exchange for putting into use, the lessee, also called the lessee, undertakes to pay monthly installments, called the leasing fee. The amount of leasing fees depends on the amount of the initial payment and the price of the item for which the user may purchase it after the end of the contract.
Leasing and renting
To better illustrate what leasing is, you can compare it to two popular transactions – credit and rent. The point is that leasing is supposedly a combination of both. For example, by renting a flat, we have the right to live in it and use it as intended. By entering into a rental agreement, we do not buy this flat, i.e. we do not buy it, but we only have the right to use it for a fee. The same happens with leasing. We do not acquire property rights, but only the right to use the subject of the contract.
Leasing and credit
If you compare leasing and credit, it’s all about the payment. Just like taking a loan, we commit ourselves to repay the loan installments regularly, just as we do when we conclude a leasing contract. In this case, as the recipient of the item, we undertake to pay the leasing fee.
In addition, when we repay all the loan installments, we become the owner of the thing we bought for the loan. We encounter a similar situation when leasing. In addition to the fact that the lease agreement gives us the opportunity to use things, while we are not its owner, it also gives us the right of first refusal after the end of the lease agreement. When the leasing contract expires, we can decide to finally purchase the item. Only then can we become the new owner of things. The lease contract alone does not transfer ownership of the item.