How Does Leasing a Heavy Equipment Work?

Leasing heavy equipment is a popular solution, used by individuals and businesses. Currently, there are two main forms of heavy equipment leasing: financial and operational.
Financial leasing is the most common one. This financing option is similar to a bank credit. The customer (also called “the lessee”) purchases the equipment through a loan, which he/ she then repays in installments.
During the contract, the leasing company owns the equipment; only after the end of the contract, the client becomes the owner. However, the risks and benefits of ownership pass on to the user, when the contract is signed.
Operational leasing is a less-used solution. This type of contract is rather like a rental contract.
Therefore, the monthly rent will not be calculated by taking into account an interest rate, but it will depend on the degree of depreciation of the equipment during the period of the contract and the profit margin of the leasing company.
In the case of operational leasing, the customer will not become the owner of the equipment, when the contract ends. If they want to buy the equipment, they will have to negotiate a price at the end of the contract, with the leasing company, as if they were buying the equipment directly from the second-hand market.

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First Posted here: How Does Leasing a Heavy Equipment Work?

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