Leasing 101: How It Works and Why It’s Different from Renting

Leasing gives one party (the lessor) the right to own an asset while another party (the lessee) pays to use it. Common assets include cars, property, and business equipment. A lease agreement spells out payment schedules, duration, mileage limits (for vehicles), and maintenance responsibilities. Leasing usually involves a fixed term of 1–5 years, unlike short-term renting that operates on month-to-month arrangements. Common lease types: • Auto Leasing: You pay only for a car’s depreciation over 2–4 years but do not own it when the term ends. • Real Estate Leasing: Landlords grant tenants the right to occupy residential or commercial space for a set period, often one year. • Equipment Leasing: Businesses lease machinery or office equipment to stay current and preserve cash flow.

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