2 min read
Definition
A finance lease is an agreement under which a business leases an asset for substantially all of its economic life, taking on most of the risks and rewards of ownership while the lessor retains legal title. It sits on the balance sheet as a right-of-use asset and a lease liability.
In plain terms
You get long-term use of the equipment and treat it much like your own, but you rent rather than buy — keeping cash free for the business.
Why it matters for your company
Leasing preserves working capital and suits assets you need to use but not necessarily own. Compare it with hire purchase in the asset finance guide.
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