How Leasing Works You, the lessee, select the type of equipment you need from the vendor or supplier of your choice. You negotiate the sales price, warranty and service you need. At lease expiration, depending on the lease structure, you choose to replace, re-lease, purchase or return the equipment. Higher residual value of the equipment at the end of the lease, usually means a lower monthly rental payment.
Leases usually require one or two advance rental payments at inception.
Although, some leases can be arranged with zero advance payments or several advance payments. They are usually specified as the first and last month's rental payments, but can also be defined as security deposits or prepaid purchase options. The end of lease purchase options can also be structured to the lessee's needs. This is the most common type of equipment lease in which the total of all payments represents the full value of the equipment. This lease offers a lower monthly payment to the lessee and in certain cases can be tax deductible.