How Does Leasing Work

Almost any type of equipment can be leased. As the lessee, you deal with the lessor concerning the term of the lease and the rate. Ancillary expenses - such as taxes, service, insurance, and maintenance - usually are the responsibility of the lessee and not deductible from the rental payment.

There are three ways you can acquire equipment through leasing.

• You can select and order the equipment and then seek financing through a lessor.
• You can select the equipment by working with a vendor or a manufacturer, which offers leasing through its own subsidiary.
• You can obtain the equipment directly through a lessor.

In most cases, the lessee selects and orders the equipment before contacting the lessor. Unless provided for in the provisions of the lease, lessors don't normally provide equipment warranties. Equipment warranties are between the lessee and the manufacturer.

By signing the lease, the lessee assigns its purchase rights to the lessor, who already own or who then buys the equipment as specified by the lessee.

When the equipment is delivered, the lessee formally accepts it and makes sure it meets all specifications. The lessor pays for the equipment and the lease takes effect.