www.ccsenet.org/ijbm International Journal of Business and Management Vol. 7, No. 8; April 2012 ISSN 1833-3850 E-ISSN 1833-8119 80 Leasing and a Comparison between the Different Lease Rental Calculations in Iran Ali Nemati (Corresponding author) Faculty Member of Department of Accounting Central Tehran Branch, Islamic Azad University, Tehran, Iran Tel: 98-21-8434-1000 E-mail: anemati67@gmail.com Yadollah Nemati Central Tehran Branch, Islamic Azad University, Tehran, Iran Tel: 98-91-7715-0425 E-mail: ynemati@yahoo.com Received: January 5, 2012 Accepted: February 7, 2012 Published: April 16, 2012 doi:10.5539/ijbm.v7n8p80 URL: http://dx.doi.org/10.5539/ijbm.v7n8p80 Abstract Leasing as a form financing besides loans, increasing capital and using different tools of monetary and financial markets has the main role in financing of goods so that this type of financing become the 2 nd after the direct loans for several years. Here, in this article leasing and its different types and phases of development briefly are defined and then lease rental calculation methods in Iran are focused on, their advantages and disadvantages are explained and compared and finally some suggestions are offered. This article aims to analyze and compare the ordinary bank method and the PMT methods in terms offer of the calculation procedures involved in each. Banks in the past used the ordinary bank method while leasing companies used both methods. This situation has, however, changed recently and banks and leasing companies both use the PMT method these days. The other aim of this study is calculation of the stepped method. The problems that customers might have in paying back the finance in the beginning of the payback period has led to the offering of the stepped method to customers to solve their problem. Because of rise of income in the following years, this method will help these customers in such a way that they have to pay smaller initial installments and pay the larger ones in the following years when their income increases. Keywords: Leasing, PMT method, Bank method, Lessee, Lessor 1. Introduction Huge developments in supply and demand and production in the second half of the 20th century have led economic policy makers to make plans for the establishment of companies that can create credit methods to help the growth of the economy and industries. For this reason leasing industry has found a special place in global economy. Lease finance makes up to 1.8 percent of the private sector investments and lease revenues comprise 3 percent of the gross profit in developed countries. It can be, therefore, seen that leasing companies can contribute significantly to the economic and industrial development of countries (Miri, 2006). Although leasing seems to be a new method of financing, its practical use dates back to centuries before. In BC 2000 Babylonians used some form of leasing boats and animals. One of the earliest theoretical descriptions of leasing was given in Roman legal texts. This is while financial leasing in its modern way dates back to 1900. The American company, MDP Botchier, wanted to make new investment to purchase new equipment in the 1950s but did not have the necessary finance for it. For this reason a new financial intermediary was established, United States Leasing Corporation, to solve this problem, thus provide the required finance. This method is widely used nowadays by companies which are short of finance. Leasing has thus experienced quick growth in the last decades and developed into an important financial method. This growth emanated mostly from the tax-related and financial advantages of leasing that existed in certain countries. Even in the absence of such advantages, economic studies show, in some periods, leasing has kept on growing at the same rate (Miri & Habibi, 2007). The first leasing company in Iran called "Iran Leasing Company" was established in 1975 by the French bank