Lease Rate

What is Lease Rate?

A Lease rate refers to the amount a lessee pays a lessor for renting fixed assets like property or automobile. In other words, the lease rate is the money the lessor earns from allowing an individual to use their property, which in turn compensates them for not being able to use the property during that time.

Lease rates are usually in dollars or rupees per month. But it can also be charged as an amount per square foot of space per year. This is usually the case with commercial Real Estate. The terms of the lease will be about the time period that the lease rate applies for and may also speak about the incremental increases in the rate over time.

Types of Lease Rate

1. Auto Lease

Auto Lease refers to cars and equipment where a leasing company buys the automobile and rents into you. So the leasing company becomes the lessor and now lends the money for the purchase and you are to pay back on that loan.

It could also be that - the dealer and the lessor is the same person, but setting up the three-party agreement allows the dealership to sell the inventory to the leasing arm. In automobile lease, the monthly payment of the respective vehicle is based on the car's expected Depreciation value and the predetermined amount of what the car will be worth at the end of the lease period.

2. Place/Space Lease

When it comes to commercial property, the said building or construction was done for the purpose of getting to people to ‘buy and rent’. There are two parties involved in the transaction and the compensation for the Investment plan in the building is stitched into the lease rate as part of the plan.