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LEASE FINANCE AND HIRE PURCHASE
What is the fundamental distinction between a lease and a hire purchase agreement?
In a lease, ownership of the asset remains with the lessor throughout the contract period, whereas in hire purchase, ownership transfers to the hirer upon payment of the final instalment.
What is a 'dry lease' in the context of asset leasing?
Lease without crew, fuel or maintenance included by lessor.
Who is called the 'lessor' in a lease finance transaction?
The lessor is the owner of the asset who grants the right to use the asset to the lessee in exchange for periodic rental payments, retaining legal title throughout the lease term.
What is meant by the 'flat rate of interest' in a hire purchase agreement?
Interest calculated on original principal throughout the entire tenure.
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