An operating lease is a type of equipment lease where the customer (or 'lessee') rents an asset for a fraction of the item's useful life. An operating lease might also be known as business contract hire, particularly if it relates to commercial vehicles.Get an operating lease
An operating lease is a type of equipment lease where the customer (or 'lessee') rents an asset for a fraction of the item's useful life. An operating lease might also be known as business contract hire, particularly if it relates to commercial vehicles.
Operating leases are the simplest form of equipment leasing, where the customer doesn't take on the risks and rewards of owning the asset (such as maintenance costs). An operating lease is essentially a method of renting an asset for your business over a short or medium timeframe.
Usually, 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.
There can also be some tax benefits to using operating leases and business contract hire instead of another form of asset finance — for example, because instead of appearing as an asset on the balance sheet, rental payments can be offset against profits.
Tell us how much you need to borrow and we will find the best lenders for you.
To choose between operating leases or finance leases, there are a few things to think about:
Do you want to commit to one item long-term, or upgrade regularly?
Are you prepared to handle maintenance and repairs yourself?
Will you use the item for most of its life?
Do you want the asset to appear on your balance sheet?
Lease period will be shorter than the lifetime of the item.
Basically a rental agreement.
Maintenance usually handled by the lender (reduced risk of ownership).
Off balance sheet.
Asset Lending & Property Team Lead
Vivek Seda is the Asset Based Lending & Property Team Lead at Funding Options. Vivek has been in the commercial finance industry for over five years, helping SMEs in the UK access over £40m of funding in that time. He also supports the business on working on corporate finance and structured transactions successfully funding Acquisitions and MBOs for businesses.
Disclaimer: Funding Options helps UK firms access business finance, working directly with businesses and their trusted advisors. We are a credit broker and do not provide loans ourselves. All finance and quotes are subject to status and income. Applicants must be aged 18 and over and terms and conditions apply. Guarantees and Indemnities may be required. Funding Options can introduce applicants to a number of providers based on the applicants' circumstances and creditworthiness. We are also able to make insurance introductions. Funding Options may receive a commission or finder’s fee for effecting such finance and insurance introductions.
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