Operating Lease

An Operating Lease (or Lease Rental) is an agreement between the ?owner? of the equipment, the Lessor and the ?user?, the Lessee. All costs such as equipment, hardware, software, installation, training, commissioning, maintenance, services etc can all be included in the agreement. The lessee is responsible for maintaining and insuring the equipment.

An Operating Lease is typically structured between 1 and 5 years, which is normally less than the equipments? useful working life, with the payments being fixed. Payments can be made on a monthly, quarterly or yearly basis. Additional equipment can also be ?Added on? for an increase in the monthly rental, or the equipment may be exchanged or upgraded under the Technology Refresh option.

Operating Lease rentals are often lower than Finance Lease rentals as you are contracted to return the equipment to the Lessor at the end of the lease term.

An Operating Lease may be treated as ?off balance sheet? whereby no asset or liability is recorded on your balance sheet. The rentals payments made are charged to the Profit and Loss Account

Finance Lease

A Finance Lease is an agreement between the ?owner? of the equipment, the Lessor and the ?user?, the Lessee. All costs such as equipment, hardware, software, installation, training, commissioning, maintenance, services etc can all be included in the agreement. The lessee is responsible for maintaining and insuring the equipment.

At the end of the lease term the Lessee chooses to:

1. return the equipment

2. continue to lease the original equipment, or upgrade the equipment for new

A Finance Lease is recorded as an asset on your balance sheet and the lease rentals are shown as a liability. A Finance Lease is typically structured between 1 and 5 years with the payment being fixed. Payments can be made on a monthly, quarterly or yearly basis. Additional equipment can also be ?Added on? for an increase in the monthly rental, or the equipment may be exchanged or upgraded under a Technology Refresh solution.

Hire Purchase

A Hire Purchase or Lease Purchase is an agreement between the ?owner? of the equipment, the Lessor and the ?user?, the Lessee. All costs such as hardware, software, installation, training, services etc can all be included in the agreement. All costs such as equipment, hardware, software, installation, training, commissioning, maintenance, services etc can all be included in the agreement. The lessee is responsible for maintaining and insuring the equipment.

Ownership of the equipment remains with the Lessor until the final payment has been made and title passes to the Lessee. The final payment, which is agreed at the start of the lease, can differ from the fixed rentals.

A Lease Purchase agreement is treated the same as a capital purchase; the asset is recorded on the Lessee?s balance sheet. The depreciation of the asset together with interest is charged to the Profit and Loss account.

A Lease Purchase agreement is typically structured between 1 and 5 years with the payments being fixed. Payments can be made on a monthly, quarterly or yearly basis. Additional equipment can also be 'Added on' for an increase in the monthly rental.