What is leasing? Definition and meaning
Leasing is, similar to a rental agreement, a financing method. The lessor makes the leased object available to the lessee in exchange for a monthly instalment. In return, the lessee receives a time-limited right of use (e.g. for a car or a machine). Ownership, however, remains with the lessor.
In contrast to a rental agreement, the lessee has to cover maintenance and upkeep, as well as repairs, themselves. At the end of a term, the lessee can return the leased object or buy it at its residual value.
Tax advantages are offered by commercial leasing, as it can generally be deducted as ongoing operating costs.