Equipment Leasing Guide

All About Equipment Leasing

Equipment leasing, sometimes referred to as equipment financing, is a way to finance a piece of equipment over a given period of time. I know, that definition in itself is very generic. The reason for that is that the term “equipment leasing” covers so many different types of leases that a single definition of it cannot possibly encompass its abilities.

What is a lease?

As it pertains to equipment for businesses, a lease is the right to use a piece of equipment given by the owner of the equipment (lessor) to another person or business (lessee) for a fixed or indefinite period of time, whereby the lessee obtains exclusive possession of the property in return for paying the lessor a fixed or determinable payment. Depending on the lease structure, at the end of the lease term the customer can either purchase, return, or continue to lease the equipment. This definition pertains to a generic type of lease. One easy way to not get confused about who is who in a leasing scenario is to remember this:

Lessee = Equipment User (Makes Payments)

Lessor = Person or Business that owns the equipment (Collects Payments)

Of course, there are variations of how this will work out, but this is the easiest and simplest way to decide which role you are playing in the leasing game.

Benefits of Equipment Leasing

Equipment leasing offers flexibility, tax benefits, and improves debt ratios. It is considered to be a quicker, easier way to finance equipment and you can generally do so with a fixed rate and payment option and 100% financing. Let’s see that again. Equipment leasing has the following benefits: