Operating Lease

An operating lease is an agreement where you rent an asset, like equipment or a vehicle, for a specific period without owning it. It’s similar to leasing an apartment—you pay regular payments for the use of the asset, but at the end of the lease, you return it, and you don’t keep ownership or responsibility for its long-term value. Operating leases are often used for short-term needs or when the lessee prefers to avoid the risks and costs of ownership. They provide flexibility and keep the asset off the lessee’s balance sheet, making accounting simpler for certain types of rentals.