Types of Leasing

The most widespread types of leasing could be classified as follows:

1. By economic nature of the leasing contract:

• financial leasing (leasing period is comparable to the useful life of the asset. In a majority of cases title to the asset passes to the lessee at the end of the leasing agreement);
• operating leasing (leasing period is much shorter than the useful life of the asset). As a rule the asset is leased several times (to different lessees) over the course of its useful life.

2. By the nature of interaction between the counterparties:

• classic leasing (lessor acquires the asset from a third party – a vendor – and transfers it to the lessee);
• buyback leasing (asset is acquired by the lessor from the lessee – and then transferred back to the same lessee under a leasing arrangement).

3. By geographic location of counterparties to a leasing transaction:

• domestic (onshore) leasing – leasing transaction involves counterparties domiciled in the same country;
• international leasing – leasing transaction counterparties are domiciled in different countries.