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An equipment lease agreement is a contractual agreement where the lessor, who is the owner of the equipment, allows the lessee to use the equipment for a specified period in exchange for periodic payments. The subject of the lease may be vehicles, factory machines, or any other equipment.
An equipment lease can be structured with a start and end date or on a month-to-month basis. Depending on the agreement, the lessee may be able to make modifications or adjustments to the equipment as long as it does not affect its value.
For example, a manufacturer might lease a production machine under a capital lease because they'll use the equipment daily over a number of years. A company with a warehouse might lease forklifts for the same reason. Many capital leases allow the lessee to purchase the equipment at the end of the term.
Equipment Lease Types Operating Leases. An operating lease is a contract that permits one company to use another company's equipment in exchange for fixed monthly payments over a specific period of time. ... Finance Leases (or Capital Leases) ... $1 Buyout Lease. ... Purchase Option Lease. ... Sale-Leaseback (or Leaseback) ... TRAC Lease.