An Operating Lease is a lease on a vehicle for a set term and set number of kms. During the lease, all the running costs are included (excluding fuel and tolls) and at the end you simply hand the car back and get a new one. There is no formal requirement to buy the asset nor a residual value to be paid out (the car is always owned by the leasing company), just one simply monthly payment. Monthly reporting will be provided to the borrower by the Lease Packaging company, so it can be a great way for businesses with multiple vehicles to keep track of everything that is happening with their fleet, including which petrol station is being used. Payments towards this type of finance can sometimes be considered operating costs and will not appear as a liability on your balance sheet.
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