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What is Leasing?

Leasing was already known as a contract construction in the antiquity around the year 2000 B.C.; in Babylonian Ur priests rented agricultural equipment to farmers through contracts, which were very similar to today's leasing.

In July 1877, for the first time in modern times, the term "leasing" was used in connection with the rent of telephones, by which the American Telephone Company Bell Telephone supplemented its sales. The first company, which considered leasing as its primary business, was the United States Leasing Corporation, founded 1952 in San Francisco, Ca. (USA). Gradually, the leasing business spread from the U.S. to Europe and other countries.

Due to favorable tax regulations, the number of leasing contracts and leasing volume in the U.S. increased rapidly. In the early 70s the banks wanted to participate in the new business and they did that through subsidiaries or shareholdings in leasing companies. In addition, car and other manufacturers formed their own leasing companies to support sales.

There is no uniform definition of the term "leasing" both in business practice and economic literature. This is due to the variety of the items which are referred to as leasing, and the amount of possible configurations. In German literature leasing is mainly characterized as the temporary transfer of use of assets against payment. The German law also qualifies leasing as an atypical rental agreement.