The vocabulary of leases and hire agreements: parties, terms, options and end-of-lease choices.
34 terms in this topic
A break option is a lease clause that lets the lessee, the lessor or both end a lease early, provided they give the required notice and meet its conditions.
Read definitionA buy-back is a contractual arrangement in asset finance where the seller, or another party, agrees to repurchase an asset at a future date or under agreed conditions.
Read definitionA captive lessor is a finance company owned or sponsored by a manufacturer, distributor or dealer network that exists mainly to provide leasing and finance supporting the vendor's sales.
Read definitionA conditional sale is a contract where the buyer takes possession of goods but the seller keeps legal title until a stated condition, usually full payment, is met.
Read definitionContract hire is a fixed-term vehicle or equipment lease where a business pays fixed rentals for exclusive use of the asset while the lessor keeps ownership and resale risk.
Read definitionAn equipment schedule is the single, auditable list of the plant and machinery on a project or contract, used to manage delivery, commissioning and handover.
Read definitionA finance lease is a lease where the financier owns the asset and your business pays to use it for most of its life, taking on the risks of ownership.
Read definitionA full payout lease is a lease priced so the lessor recovers the asset's cost, finance charges and fees through the rentals, usually leaving a nominal or zero residual.
Read definitionA full service lease is a vehicle lease in which the lessor supplies the vehicle and bundles finance, maintenance, tyres, registration and fleet administration into one fixed monthly payment.
Read definitionHigh value leasing is the leasing of assets, most often prestige vehicles, priced well above typical fleet or consumer levels, which raises residual risk, tax exposure and credit requirements.
Read definitionHire is a contract under which an owner or supplier lets a hirer use goods for an agreed period in exchange for payment, while title stays with the owner.
Read definitionAn independent lessor is a non-bank, non-captive finance company that owns the assets it leases and prices deals on its own underwriting appetite rather than a manufacturer's program.
Read definitionA lease purchase is a lease over a vehicle or equipment with a contractual option to buy it at the end for a pre-agreed residual value.
Read definitionA lease term is the agreed period a lease runs, from the commencement date to expiry, which sets when rent or rentals are payable and when the lease can end.
Read definitionLease vs buy is the choice between paying to use an asset for a set term and owning it outright or with finance.
Read definitionA lessee is the party that takes the right to use an asset, such as premises, a vehicle or equipment, from the lessor under a lease.
Read definitionA lessor is the party that grants a lease of property, goods or equipment to a lessee, keeping legal title while the lessee has possession and use.
Read definitionMaintenance is the inspection, servicing and repair work that keeps an asset in safe working order, and in finance and hire agreements a contractual obligation with set tasks.
Read definitionA manufacturer buy-back is a commitment by a manufacturer to repurchase a vehicle or equipment at a pre-agreed price, or on set conditions, usually when a lease ends.
Read definitionA master lease is an umbrella agreement: in property, a head lease taken to sublet; in equipment finance, one contract covering separate asset schedules.
Read definitionA middle-ticket lease is equipment finance for medium-value assets like trucks or medical machines, manually underwritten rather than automated, with a negotiated term and residual.
Read definitionA novated lease is a three-way car lease where your employer takes over the lease payments and deducts them from your salary, mostly before tax, while you work there.
Read definitionNovation is a three-party agreement that replaces one party to a contract with another, releasing the outgoing party and passing its rights and obligations to the incoming party.
Read definitionOff-lease equipment is an asset, from laptops to utes and excavators, returned to the lessor at the end of its lease and resold on the secondary market, often refurbished.
Read definitionAn open-ended lease is a lease where the lessee carries the residual value risk, paying any shortfall if the asset sells for less than its residual at the end.
Read definitionAn operating lease is a lease where you pay to use an asset for a set term and hand it back, with the financier keeping ownership and the resale risk.
Read definitionAn option to purchase is a contractual right, not an obligation, to buy an asset such as land or a leased vehicle at an agreed price.
Read definitionA renewal option is a clause in a commercial lease that gives the tenant the right to extend the lease for a further term on pre-agreed or determined terms.
Read definitionRentals are arrangements to pay for the use of an asset without owning it, and in a lease contract the periodic payments themselves.
Read definitionResidual value is the amount a leased car or asset is expected to be worth when the lease ends, set at the start and used to calculate the rentals.
Read definitionA small-ticket lease is an equipment lease for relatively low-value assets, where the lessor keeps legal title and you pay fixed lease payments over an agreed term.
Read definitionA trade-in is the handover of an owned or financed asset, usually a vehicle or piece of equipment, to a dealer in exchange for credit towards a new purchase.
Read definitionAn upgrade is an agreed change that improves or replaces what a contract delivers, including a move into a newer asset under a lease or hire agreement.
Read definitionA vanilla lease is a plain commercial lease over equipment or business assets, with a fixed term, fixed payments and no bundled services or unusual clauses.
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