An operating lease is a commercial finance product that enables the customer to have the benefits of ownership, while the financier retains the actual title.
How does an Operating lease or Rental work?
The operating lease was historically off balance sheet. This changed in January 2016 with a change in the International Accounting Standards. This effectively meant that there is a single accounting model for all leases and that they must be capitalised on the balance sheet.
The client has 3 options at the end of an operating lease or rental, they can either hand it back, continue to rent it, or make an offer to purchase it.