A lease that transfers substantially all of the risks and rewards of ownership of a fixed asset to the lessee. The lender (often a finance house) buys the asset and then leases it to the borrower (lessee). Under the terms of the lease the lessee pays instalments equivalent to the full value of the asset over the term of the lease plus a return on capital to the lender, instead of interest on a loan. At the end of the lease, after the final payment has been made, the asset may be transferred to the lessee.