Narinder Dhiensa called on behalf of his father who had a leasing arrangement for a couple of large dairy cabinets for his store in Derby. The deal, with leasing company ING, arranged by Kingsway, came with a first rental payment of £444 followed by 36 monthly payments of £148 (amounting to £5,772 all told for the equipment). All well and good and the rep who sold him the deal promised (!) that he would have to pay only a nominal £1 to end the contract.

However, when the time came, dad got a letter from the leasing company saying he now has an option to purchase the goods. The company wanted £67.50 or send back the cabinets (at this point I get an interesting mental image of slightly worn dairy cabinets being delivered to finance offices).

What are the legalities here? Leasing can be attractive because no deposit is required (although a couple of months' payment in advance is usually needed). One of the main benefits is that the cost is known from the beginning. But, if you lease equipment you never become the owner of it. The lessor remains the owner.

Hire purchase is different in that you will own the asset outright at the end of the hire period. Interest is usually fixed and more expensive than a bank loan.

My research shows that there are other variations. Leases may be for a fixed period (close-ended) for, say, up to five years. There may be a further lease option at the end of that period, or an option to purchase the article. There is also an open-ended lease which allows you to terminate after a minimum period.

Yet another option is a balloon lease, where interest only is payable early on, with a capital payment at the end of the lease.

My 'expertise' ends here, so for more info contact the Finance & Leasing Association on 020 7836 6511.