leasing

Form of renting, like hire purchase, typically used by businesses to finance the acquisition of land, buildings, machinery, and other industrial equipment. Unlike with hire purchase, responsibility for maintenance lies with the company which leases out the land or equipment.

Leasing is widely used by companies in preference to outright purchase partly because there are tax advantages, and partly because less financial capital is needed at the time the leasing agreement is taken out. In the leasing agreement, there is often a clause that enables the company to purchase outright the leased equipment at very low cost when the leasing agreement expires.

The practice of leasing is not confined to companies. Universities, hospitals, government bodies, school boards, and municipalities frequently lease essential equipment as a result of cutbacks in public funding and increasing restraints on capital budgets.