An operating lease enables a lessee to use a car without taking the risks associated with ownership. The ownership of the vehicle is retained by the finance provider and the lessee is provided with full use of the vehicle in return for monthly payments matched to the agreed term and mileage. At the end of the car lease term, the lessee’s obligation ends right after he returns the vehicle in good condition. In short, this is simply a rental agreement.

What are the benefits of an operating lease?

• Operating lease terms usually have a 24 - 48 month range
• The fixed car lease rentals are on a single monthly invoice which allows easy budgeting
• Your working capital is maintained
• Operating lease repayments are fixed for the term
• You control vehicle maintenance and servicing
• Car lease rentals will be fully tax deductible if it is used to generate taxable income
• No resale value risk as the financier will own the vehicle at the end of the term of the operating lease.

An operating lease is best suited for vehicles largely used for business. Meaning that the car is used for business 50% or more of the time. It’s also a great option if you would need plenty of mileage per year and would like no residual risk at the end of the car lease.