There are two main types of equipment leases, each with its own features.
The different approaches have tradeoffs that should be considered to identify
which will best fit a company's business strategy.
Capital (Finance) Lease
Operating Lease
Essential Elements
of Basic
Financial Products
Loan
Rent
Fully paid over term with interest
Pay for economic life used
Ownership transfers to user automatically
Ownership remains with lessor; “off balance sheet”
Depreciated by user
Depreciated by lessor
Monthly payment higher than operating lease for equivalent term
