Also called: Rental agreement
Operating lease
An operating lease is a rental arrangement where the financier retains ownership and the residual risk of the asset, and you return it at the end of the term. Payments cover the use of the asset rather than its purchase, and usage or condition conditions usually apply.
What is an operating lease?
An operating lease is a rental arrangement where the financier retains ownership and the residual risk of the asset, and you return it at the end of the term. Payments cover the use of the asset rather than its purchase, and usage or condition conditions usually apply.
Example
A firm leases 40 laptops for 36 months at a fixed monthly rental, then returns them and takes a new fleet rather than dealing with resale.
Why it matters
It gives predictable replacement cycles and no resale exposure, but you build no equity in the asset and excess use can attract charges.