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What is Operating Leasing
Operating leasing is a type of leasing, its essence is a short-term lease. After the expiration of the lease, property goes back to the lessor.

Operating Leasing sometimes also referred to as an operational lease is a type of financial services, and in the enterprise it is among foreign sources of funding. Operating leasing is a type of leasing, its essence is a short-term lease. After the expiration of the lease, property goes back to the lessor. The possible transfer of ownership of the leased asset to the lessee is not a contractual right. The lease period for operating leases is shorter than the economic life of the subject of the lease. The lessor usually provides service and maintenance of the asset, bears most of the risks and benefits of ownership of the leased item.

The lessors are usually leasing companies.

Operating Leasing in practice: Companies use leasing as one way of external financing. Operating leasing is worth to use if the value of the asset after its use by the lessee is still sufficiently high and significantly reduces the financial cost of the operation. Its advantage is the comfort. The lessee receives not only the asset but also services associated with its operation. E.g., for operating leasing of a car, in the price is included insurance, complete service of the vehicle, taxes, replacement vehicle during the repair, etc.

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Last update: 02.08.2015

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