The lessor will usually take more of the risk of ownership in this type of lease which allows a lower monthly payment in the terms of the lease agreement. Additionally, there are some tax benefits to this type of lease which means that the lease is not documented as an asset or a liability. An operating lease is another lease that can qualify for purchase at the end of the lease. Any lease that is not a capital lease is defined as an operating lease. These are generally used for short-term leases of equipment.
Lessees can acquire use of equipment for a fraction of the asset's useful life.
An operating lease cannot violate any of the four criteria stated in a capital lease. A True Lease is not capitalized on the user's financial statements. Here's another type of lease classification that is appropriate for equipment vulnerable to technological changes because the lessor retains ownership of the equipment. A True Lease provides an agreement which is recognized by the Internal Revenue Service as a rental agreement. This is an advantage to the customer because monthly lease payments are fully tax deductible.