Any particular organization requires an asset to have a smooth running of its business. Without it, production will stop and it will lead to loss. At any point of time the company may have to face a situation where in a new asset is required but it does not want to put pressure on the dwindling finances. It can also be that the asset or equipment is required for short time duration and procuring it is not a viable option. In that case, the companies can opt for asset finance leasing.
Asset finance leasing is a way through a company can have access to the assets without procuring it. By resorting to this option the company or organization can utilize the assets without spending any cash from its own resources.
Companies who are looking for this process can have two readily available options. The options are direct lease and sell and lease back. Under the option of direct lease the company identifies the particular asset which can be new or pre owned, as per the requirement of the job. Then in turn the company will ask a leasing company to buy the required equipment from its manufacturer or owner. After the leasing company had bought it, it will lease the equipment as per the terms and conditions.
On the other hand, under sale and lease back option, the company will sell the particular asset to the leasing company and they in turn will lease the equipment back to the company. It is to be remembered that in both the cases, it is the leasing company who owns the asset. However, the company has also the provision of having a hire purchase agreement with the lending authority and can get back the asset by clearing all the payments.
This type of leasing is preferable when the company wants to utilize the asset to enhance the production on a short term basis. Other wise it is better to avail a loan and then purchase. The company opting for asset finance leasing must try to understand the various aspects of the leasing company before opting for it.