Over the agreed period of the operating lease, you will be able to make full use of the asset in question and in return make regular rental instalments to the asset finance company.
An operating lease is typically used where assets have a residual value, such as vehicles and machinery. The residual value of the asset is estimated when the lease is set out. The leasing company runs the risk that this value could increase or decrease over the period of the contract. However, the residual value is still set at the beginning of the contract.
The rental payments do not cover the entire cost of the asset or assets but are calculated based on the original purchase price and the forecast residual value. Other services such as maintenance of the assets, may also be included in the operating lease, depending on the exact terms laid out in the initial agreement. This is most usual for vehicle leasing, where the arrangement is more commonly known as contract hire.