5. Rental rates include interest and principal repayments. If the seller has the resources and the legal right to sell the goods on credit (which in most countries usually depends on a licensing system), the seller and owner will be the same person. But most sellers prefer to receive a cash payment immediately. To do this, the seller transfers ownership of the goods to a financial company, usually at a reduced price, and it is that company that makes the goods and sells them to the buyer. This establishment of a third party complicates the transaction. Suppose the seller makes false claims about the quality and reliability of the goods that encourage the buyer to “buy”. In a conventional sales contract, the seller is liable to the buyer if these representations prove to be false. In this case, the seller issuing the representation is not the owner who sells the goods only after payment of all payments to the buyer. To combat this, some jurisdictions, including Ireland, place the seller and the financial house jointly liable for breaches of the sales contract. Assuming that equipment that costs Rs 1.00,000 is sold during the rental sale on the terms that interest is charged at a flat rate of 15% per year and that payment is made in 5 equal annuities. In other words, the lease-sale can be defined as an option to finance or acquire an asset for use, the financing company leasing the property on the lease to the buyer for small tranches called rental fees, and the buyer having the right to use the asset with the ability to purchase the asset by paying all these payments spread over a given period.
Leasing has been very important for the financing of vehicles, whether it is a personal car, a commercial vehicle, etc., but now the equipment, the machines, etc., are also financed by the rental-sale method. The infographics below explain how the transaction is proceeding. ConclusionHire Purchase has been an important source of funding lately. It offers a convenient way to pay for and acquire assets that are otherwise financially inaccessible. Thus, rentals also help a country`s economy continue to grow. However, before an agreement can be reached, it is necessary to have a clear understanding of the costs and the information provided. There are several other types of loans and purchases at temperatures that look like this, but there is the difference between lease-sale and fixed-term loans and there is also the difference between rent-sale and tempes selling.