Got a question?
We're here to help!

Operating lease explained

What is an Operating Lease?

An operating lease is a hire rather than a credit agreement which means the organisation is paying simply to use the equipment for a certain time period. When setting up the lease the lender would estimate how much the equipment is likely to be worth at the end of the finance term (its residual value) and that amount would deducted from the lease value, reducing the payments.

The lessor, who is the owner of the asset, remains responsible for the maintenance and upkeep of the asset during the lease period. At the end of the lease term, the lessee has the option to return the asset to the lessor or to purchase it for a predetermined price.

What's the difference between an operating lease and a finance lease?

The key difference between an operating lease and a finance lease is that in an operating lease, the lessee does not take ownership of the asset and does not recognise it on their balance sheet. As a result, operating leases are considered to be off-balance sheet financing, which can provide the lessee with greater flexibility and lower financial risk.

Ready to apply for an operating lease?

Sign up today to request a no-obligation quote, or contact us for more information.

What is a Finance Lease?
What is Hire Purchase?

Operating Lease

Typical operating lease assets

The specific assets that are included under an operating lease can vary depending on the needs and requirements of the lessee and the lessor. Here are some of the most common types of assets that can be leased under an operating lease:

  • Vehicles: Cars, trucks, buses, and other types of vehicles.
  • Equipment: This can include construction equipment, agricultural equipment, medical equipment, and other types of machinery.
  • Office equipment: Operating leases are often used for office equipment such as copiers, printers, computers, and other types of technology.
  • Aircraft: Airlines and other companies in the aviation industry frequently use operating leases for aircraft.
  • Real estate: Commercial properties such as office buildings, retail space, and industrial buildings can also be leased under operating leases.
Operating lease in a modern office - A contemporary office space with plenty of greenery, featuring a Mac computer setup with premium accessories and a microphone.
Operating lease brainstorming session - A woman engaged in the process, brainstorming ideas using a whiteboard and colorful sticky notes.
Benefits of an operating lease

How an operating lease could help your organisation

  • Off-balance sheet financing: Does not appear on the your balance sheet, which can improve your debt-to-equity ratio.
  • Lower upfront costs: Allows an organisation to obtain the use of an asset without making a large upfront capital investment.
  • Improved flexibility: Typically have shorter terms than capital leases so you can easily adapt to changes in their needs and requirements.
  • Lower maintenance costs: The lessor is usually responsible for the maintenance and upkeep of the asset which lowers maintenance or repair costs.
  • Access to newer assets: You can access newer, more advanced assets without having to make a large upfront investment in the technology.
  • Tax benefits: Can provide tax benefits as the lease payments may be deductible as expenses.
Working for you

Is an operating lease right for your organisation?

You need to make sure that any financial decisions you make align with your goals and budget. But how do you know if an operating lease makes sense for your organisation? At Bluestone, our team of asset finance experts can help you determine whether an operating lease is the right choice for you.

We'll work closely with you to understand your goals, budget, and the nature of your organisation, and guide you through the advantages and disadvantages of operating leases. Our network of funders can provide you with a range of financing options to suit your needs, and we'll be with you every step of the way to ensure you make an informed decision.

With Bluestone, you can trust that our asset finance expertise will help you make the right choice. Contact us today to learn more about how an operating lease could benefit your organisation.

Operating lease productivity - A woman working on a laptop, with a beautiful sunset in the background.

How to apply

Apply for an operating lease

If you're considering an operating lease for your organisation, the next step is to reach out to our team of asset finance experts at Bluestone. We can provide you with a free consultation with your dedicated account manager to help you determine if an operating lease is the right choice for your needs.

During this consultation, your account manager will take the time to understand your organisation, sector, and goals, and provide you with a range of financing options tailored to your specific needs. They'll guide you through the entire process, from application to approval and beyond, and ensure that you have all the information you need to make an informed decision.

Whether you're looking to acquire equipment, machinery, or vehicles, our team of experts can help you find the financing solution that's right for you.

Looking for an operating lease?

Sign up today for a no-obligation quote.

Operating Lease

Frequently Asked Questions

Can you explain the concept of an operating lease and how it differs from other types of leases?

An operating lease is a type of lease agreement where the lessor provides the use of an asset to the lessee for a specified period, but the lessee does not own the asset. It is different from a capital lease, which is more like a loan where the lessee takes ownership of the asset after the lease period. In an operating lease, the lessor retains ownership of the asset and is responsible for maintenance and upkeep.


How does an operating lease benefit my organisation, and what advantages does it offer compared to other financing options?

An operating lease can benefit your organisation by allowing you to acquire the use of an asset without the financial burden of ownership. You only pay for the use of the asset during the lease period, which helps to conserve your organisation's capital for other investments. Additionally, you can take advantage of tax benefits and have the flexibility to upgrade or change assets at the end of the lease period.


What types of assets are eligible for financing through an operating lease, and what are the requirements for approval?

Assets that are typically eligible for financing through an operating lease include equipment, vehicles, and other tangible assets. Approval requirements vary depending on the asset and your organisations financial profile, but typically include credit checks and a demonstration of the ability to make regular lease payments.


What is the typical repayment period for an operating lease, and how does it impact my cash flow and financial statements?

The typical repayment period for an operating lease is anywhere from two to seven years, depending on the type of asset and the terms of the lease agreement. The impact on your cash flow will depend on the amount of the lease payments, which are typically lower than if you were to purchase the asset outright.


Are there any penalties or charges associated with terminating an operating lease early, and can you provide guidance on how to handle these if needed?

Penalties for terminating an operating lease early may depend on the terms of the lease agreement. However, we can provide guidance on how to handle this situation if it arises, such as negotiating a buyout option or finding alternative financing options. The goal is to ensure that the termination of the lease has as little impact on your organisation as possible.


Our team are always here to help...

We know finance can be complex and often it's easier to talk things through. Drop us a message or give us a call 0330 135 8660 and we'll get back to you ASAP.

Get in touch
Explore how fast, affordable finance can help your organisation grow.
Finance for your organisation
Maximise your sales potential by offering your customers an alternative to paying with cash.
Finance for your customers
Top ↑

Got a question?

Our team are here for you, let us show you what we can do!

Thank you! Your submission has been received!
A member of our team will contact you asap!
Oops! Something went wrong while submitting the form.

By filling out this form, you agree to the terms laid out in our privacy policy