A capital lease is generally long-term and non-resilient and is used to lease devices that the company wants to use for the long term or buy at the end of the leasing period. In this lease, the purchaser is responsible for maintaining the assets and paying all insurance and taxes related to the equipment. The assets and liabilities of the equipment are recorded in the taker`s balance sheet during the rental period. Companies prefer this type of leasing when they rent expensive equipment that they may not be able to buy immediately. Neither this lease nor any interest in it can be transferred or transferable through legal conduct. When a bankruptcy procedure is initiated by the tenant or against the tenant as amended, the tenant is declared insolvent or if the tenant makes an assignment in favour of his creditors, or if a letter of seizure or execution is filed on the device and is not released or executed within ten days (10) , or if a trustee in bankruptcy is appointed in a proceeding or legal action where the tenant is a party with which the tenant takes possession of the device, the lessor has one or more of the remedies covered in Section 14; this lease ends immediately at the landlord`s choice and is not considered an asset of the taker after the exercise of this option. A landlord and tenant can be either a person or a business, depending on the circumstances of the rent. For example, you might own a small business that manages forklift rentals for construction companies, or you may have to plan an event and rent audio devices (such as a sound system) to a friend. Entering into an equipment lease is the best option compared to buying new equipment, as you should use an equipment lease every time you want to rent equipment you own from another person. You can also use it to rent devices that someone else owns if they don`t sign a contract for you. These will be the two main types of leases used by companies that lease their equipment.
There are also other types of equipment leases that combine the characteristics of these two types. If you need to create a model for your business, think about the needs of your customers and your business.