Through leasing you can acquire tangible assets without actually having to buy them. It comprises of a contractual agreement where the firm or individual obtaining the asset is known as the lessee and the owner of the asset is called the lessor. The receiver pays the rent for the goods and services he uses.

The three broad types of leasing are hire purchase or lease purchase, finance lease and contract hire. There are few features in which these types vary, most prominent of which is the ownership of the asset at the end of the term of lease.

Hire Purchase which is also known as the lease purchase is widely available in many countries for obtaining tangible assets like cars, television, etc. The period of the lease is defined in the initial contract and the ownership of the asset transfers in the name of the lessee by the end of that period. Many businesses these days do not find this method favorable as the want to use the assets without having the ownership. This way they avoid the depreciation cost and are not stuck with the asset of reduced value by the end of the period.

Finance lease is another technique which is quite similar to the hire purchase and the basic difference is that the ownership stays with the finance company. The agreement can be prepared based on the particular case. The complete value of the asset can be paid off with in the term of rent.

Contract hire or business contract hire is a commonly used technique in UK for car leasing and many companies use it to acquire cars for employee benefits. Often it is associated with a maintenance contract and the lessee gets the opportunity to use the asset for the term of the contract. The finance company gets back the asset on a residual value by the end of the lease.

Thus leasing allows one obtain and use tangible assets without taking responsibility of ownership and maintenance. It is important to devise the contract wisely and specify the terms and conditions that suit you best.