Lending » Vehicle & Equipment Finance Options » Operating Lease

Operating Lease

An Operating Lease is an arrangement where the lessee agrees to lease the motor vehicle for a predetermined period and at the end of the term the motor vehicle is handed back to the leasing company.

The leasing company assumes the risk with regards to the residual value of the motor vehicle at the end of the lease. The rental payments for the operating lease are fixed for the term of the lease.

The operating lease agreement will provide for a maximum number of kilometres that can be travelled by the motor vehicle during the lease term. If the maximum number of kilometres is exceeded by the lessee an excess kilometre charge will be payable by the lessee to the leasing company.

The motor vehicle must be returned to the leasing company at the end of the lease in good order and condition. Depending on the type of repairs to be made to the motor vehicle upon return (if any), the lessee may be required to pay the cost of those repairs.

The lessee has the option of choosing a fully maintained or non-maintained operating lease.

A fully maintained operating lease is an arrangement where all of the operating costs (such as lease rental, repairs and maintenance, registration etc.) of the motor vehicle are covered by a single monthly payment made by the lessee to the leasing company. The leasing company takes care of all maintenance and administration costs of the motor vehicle.

Under a non-maintained operating lease the lessee is responsible for all maintenance and other running costs of the motor vehicle.