| A lease is a simple and economical way to obtain the benefits of the latest technology without assuming the up-front costs, and risks, of ownership. Simply defined, a lease is a usage agreement between an equipment owner (the lessor) and a user of that equipment (you, the lessee). The lessee pays a periodic fee, usually monthly, to the lessor for the use of the equipment. Leases most often take the form of written contracts with specific terms and conditions spelled out: length of term, amount and timing of payments, and any end-of-lease conditions or restrictions. The lessor is usually viewed as the owner of the equipment during the lease term, but depending on the type of lease you select either you or the lessor may be able to claim the benefits of ownership for tax purposes.
Regardless of which type of lease you choose, the future expected value of the equipment (the residual value) is considered when pricing most types of leases. The residual value is the lessor's estimate today of the equipment's value when the lease term ends.
At the end of your lease term, you'll have the following alternatives (depending on the type of lease you select):
- Return the equipment, and, if you'd like, sign a new lease for the most current, updated equipment
- Exercise a purchase option and buy the equipment
- Renew or extend the lease
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