Lessees may either lease one piece of equipment at a time or many items bundled into a single lease. Sometimes, companies that acquire equipment continuously may use a master lease to avoid executing a new lease contract for each acquisition. Two common types of leases are operating leases and finance leases. In operating leases, the term is shorter than the expected useful life of the equipment. At the end of the lease term, the lessor will use its equipment remarketing expertise to subsequently find other lessees for the returned equipment, something the typical equipment user does not have the time or ability to do.
Rentals tend to be lower because of the longer term and less residual risk.
Finance leases are usually popular for equipment with relatively lower, calculable levels of depreciation. Another type of lease that is popular is the sale-leaseback. A sale-leaseback is when you purchase the equipment you need and use it for a period of time before selling it to a lessor. After selling the equipment, you then lease the equipment. This is another way that businesses can free up working capital.