Similar to a Finance Lease, an Operating Lease allows you to rent the asset from us while you need it.

The key difference between the two is that an Operating Lease is only for part of the asset’s useful life. This means you pay a reduced rental because the cost is based on the difference between the asset’s original purchase price and its residual value at the end of the agreement.

Operating leases include some kind of maintenance provision and they often have relatively short lease periods — meaning the lessee has more flexibility than they would with finance leases or hire purchase.

Another indirect benefit of operating leases is that because they usually have short terms, it’s possible to upgrade regularly. Some facilities even allow upgrades during the term.

• Low initial outlay – Quick access to the asset you need without a heavy upfront investment
• Freedom – Full use of the asset without having to buy it outright
• Flexibility – Option to re-rent, purchase or return the asset at the end of the term
• Pay less – Rental cost is reduced as it is based on a percentage of the original capital cost
• Off balance sheet funding
• Reduce costs – Reclaim VAT on rentals

• All maintenance must be carried out by the lessee with a financial lease, whereas with an operating lease, the lessor will take care of all running costs and maintenance.
• At the end of a finance lease, the lessee may have the option to purchase the equipment for a final one-off payment. However, you must return the equipment after an operating lease.
• With a finance lease, the equipment is included as an asset to the lessee, whereas an operating lease is classed as an expense.
• A financial lease generally covers a longer period of time than an operating lease.