Difference between operating lease and financial lease?

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Finance lease is often used to buy equipment for a major part of its useful life. The goods
are financed ex GST and have a balloon at the end of the term. Here, at the end of the
lease term, the lessee will obtain ownership of the equipment upon a successful ‘offer to
buy’ the equipment. Traditionally this ‘offer’ is the balloon amount.

An operating lease agreement to finance equipment for less than its useful life, and the
lessee can return equipment to the lessor at the end of the lease period without any further
obligation.