Leasing
Renting or hiring a machinery or any other asset by paying a monthly rental is called as leasing.
The ownership will never be transferred the user, however maintenance and repairs should be done by the lessee.
Hire purchases
It is where high value assets will be purchased by an agreement between two party's, here the firm will ask another business to buy the assets on behalf of them and will pay the amount monthly over a period of time, at the end of payment the ownership will be transferred back to the firm.
Overdraft
It is a term loan provided by banks to the current account holders where they will be allowed to withdraw more money than they have in the account using cheques.
Advantages of external sources of finance
1. Hard to obtain finance because high documentation.
2. Interest had to be paid.
3. High Liabilities.
Disadvantages
1. Low opportunity cost.
2. Low interference.
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