A lease-sale (HP), , also known as a increments plan or never-never-before, is an agreement by which a customer accepts a contract to acquire an asset by paying an upfront amount (for example. B 40% of the total) and refunds the balance of the assets plus interest over a given period. Other similar practices are described as a closed lease or a lease-to-own. 26. With respect to the exercise of the option and the payment of the price of the machinery and equipment and other funds covered in point 25, the sale of these machines and equipment to the tenant is considered to be completed, as the option comes into effect on the effective date of the option. Until then, however, the company will remain the owner. However, if the tenant does not pay the amount owed and to pay to the company, as it is payable on the date the option takes effect, that contract is terminated and the tenant will immediately return the machinery and equipment to the company in good working condition. The use of leases as a type of off-balance sheet financing is strongly discouraged and does not conform to general accounting principles (GAAP). If the lender terminates the contract, for example. B because you did not follow the refunds, he may be able to take possession of the goods. As a general rule, the lender needs a court decision.
In addition, rental-sales systems can encourage individuals and businesses to purchase goods that are beyond their means. You can also pay a very high interest rate at the end, which does not need to be explicitly stated. Please note that some information on this page tells you about the legal requirements of a lease-sale and some will be First Response Finance`s own guidelines. If you are having trouble maintaining repayments for a rental purchase or a conditional sales contract, it may be best for you to terminate the contract yourself. This limits the amount you owe. Once you are late with repayments, the lender can terminate the contract and you may end up having to pay more. Leases usually take between 2 and 5 years, the last 3 most common years. Under a lease-sale agreement, the consumer does not own the goods until after the payment of the last tranche, although he has made full use of the goods throughout the repayment period.