What is an operating lease?

Wondering how to finance your commercial vehicle assets? An operating lease is tailored to meet your specific needs with monthly payments over a pre-negotiated term, usually from two to seven years.

With an operating lease, you have the use of an asset but no rights of ownership. You are responsible for all vehicle maintenance and wear and tear (like tyres and servicing costs). At the end of the agreement, you can choose to refinance and extend the lease or return the asset according to the conditions of the agreement.

An operating lease lets you increase, upgrade or renew your commercial vehicles at the lowest cost

When choosing an operating lease, you will pay set monthly payments over an agreed period. Much like a finance lease, when the operating lease period ends, ownership of the asset will not be transferred to you, and it must be returned to the finance provider.

You are also responsible for vehicle maintenance and service costs during the lease period. The benefit of this type of leasing is that it gives you the flexibility to manage your own commercial vehicle maintenance needs, and the risk of vehicle depreciation at the end of the agreement is totally removed. There are tax benefits, too, as you may be able to deduct your monthly payments as operating expenses.

Operating lease benefits

  • Protect your cashflow with minimal capital outlay
  • Offset rental payments against taxable profits as a business expense
  • Represents off-balance sheet financing of assets
  • Easily upgrade and renew commercial vehicle assets

What happens when an operating lease ends?

When the lease ends, you can either refinance and extend your existing rental agreement or return your asset to the lender.

What is the difference between contract hire and operating leasing?

An operating lease and contract hire are financing options that give your business access to the vehicles and equipment in return for monthly payments over a fixed period. The main difference is that while contract hire offers all the benefits of an operating lease, the fixed price agreement also includes a comprehensive maintenance package.

Find out more about contract hire. 

How to choose the right operating leasing partner?

At Asset Alliance Group, we can help your business grow and succeed. Our specialised team is here to provide you with independent advice and a tailored service while helping you secure the best purchase deal available in today’s market. By accessing multiple lenders, our award-winning approach optimises P&Ls, balance sheets and cash flows – reducing risk as only assets are used for security purposes. We take on all the time-consuming sourcing tasks so that businesses don’t have to – delivering an ideal leasing partner solution quickly and efficiently.

Speak to us about your financing options