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Buying or Leasing a Computer System

What is a lease? Why would you choose to lease a capital item versus buy? What steps would one follow to decide whether to lease or buy a computer system?

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What is a lease?

A lease is usually referred to as a rental agreement between the owner of the property commonly called the landlord or lessor and the renter of the property commonly called the tenant or lessee. The landlord gives the tenant the right to use and occupy rental property for a certain period of time. It can be an oral agreement or it can be in writing. Usually, if the lease extends beyond one year, states require it in writing. Oral lease has a disadvantage of future misunderstandings on the terms of the agreement. Potential problems for enforcement of the terms between the lessor and lessee can take place when the agreement is done orally. The use and possession of the rental property and other things that are part of the lease are to be returned to the landlord. The tenant also agrees to pay the landlord a specified amount of money each month which is called a rent. The agreement usually spells out all the terms involved in a land or merchandise rental agreement. This includes the length of time a lessee may use it and the conditions like financial penalties for late payments, schedule of payments and the condition of the property/properties upon return to the lessor. A lease can be short or long term. A short term lease can be extended for a number of years.

A lease agreement is a legally binding contract which obligates the renter to make regular payments and it protects both the lessor ...

Solution Summary

The solution discusses the definition of lease, the reasons why one would choose to lease a capital item versus buying and the steps one must follow to decide whether to lease or buy a computer system. This solution is 875 words.

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