Difference Between Lease vs Rent
Getting a new apartment is usually one of the most exciting things in life. It’s a new environment and even a new beginning for a lot of people. But while you anticipate all of that excitement, do not forget to take into consideration the available provisions and all other related issues before signing. Speaking of which, what exactly would you be signing? It is important to know the difference between lease and rent so you can make informed decisions before giving out your signature and hard-earned money.
Both of these terms are similar, but there are some distinct differences that we will discuss over the course of this post.
Definition of Lease
A lease is defined as a contract agreement between two parties meant to last for a specified time in which one party conveys an asset to another. Here are a few keywords that will help you understand more about this term:
- Lessor: This is the party with the right of ownership and discretion to provide an instrument for the service of another based on a contract agreement for a specified time. A lessor can also be referred to as a property owner.
- Lessee: This is the party who holds the right to make use of an asset based on a contract agreement for a specified time. Another name for a lessee is a tenant.
Definition of Rent
Rent is defined as the expected periodic payment made by a lessee to a lessor for the use of a property as stated in the terms of the agreement. In other words, comparing lease vs rent shows that it is the money paid as stated in a contract agreement. It is usually paid every month, but this may vary in some cases depending on what was stated in the agreement.
The lessor can change the terms of the agreement and bring it into effect within thirty days. This is usually not the case with the other arrangement where the terms remain the same until the end of the duration.
Main Differences Between Lease vs Rent
There are a number of things to take into consideration before taking up an asset for a time. In the table below, we will lease vs rent and state how these two vary. This will help you understand what you are about to get into when you are signing for a property.
|Basis of Comparison||Lease||Rent|
|Definition||A contract agreement between two parties meant to last for a specified time in which one party conveys a property to another||The expected periodic payment made by a lessee to a lessor for the use of a property as stated in the terms of agreement|
|Duration||Usually long term; six months or more||Usually short term; every month|
|Accounting standard||Based on accounting standard 19 or AS-19||Not based on any accounting standard|
|Management||Lessor is responsible for the management||Managed by the tenants|
|Property||Mostly assets and equipment||Mostly landed properties and vehicles|
|Terms and condition||Mutually acceptable by both parties||The property owner makes the terms and conditions alone|
Difference Between Lease and Rent: Conclusion
At the end of the expected time, one is expected to cancel or renew the monthly payment, but the other arrangement offers the chance to purchase the asset. To a lot of regular people, comparing rent vs lease does not result in any difference and it is understandable why a person may think like that.
But for professional and business purposes, it is in your best interest as a lessor or lessee to know what these terms stand for and what roles you are expected to play.