Operating Lease

What is an Operating Lease?

An Operating Lease is a type of finance that has historically enabled customers to invest in high value items with a long life span such as aeroplanes, ships and heavy duty trucks.

Nowadays, it is very common for Schools and Academies to invest in low value equipment via an Operating  Lease as it adheres to the rules governed by the Local Education Authorities (LEA).

An Operating Lease has similar traits as a lease rental agreement; they are both for a short period of time, they have fixed monthly or quarterly rental payments and allows your School to invest in Cook Stations when you need them and not when your budget allows it.

Behind the scenes, an Operating Lease works slightly different to a lease rental agreement.

As an Operating Lease is commonly associated with high valued items with a long life span, at the end of the lease, the Cook Station will still have a value known as a residual value, which can then be sold or leased again.

As there is a residual value on the item, asking a School to have a lease for the full value of the item would not be cost efficient, so this is where a Operating Lease comes into play.

An Operating Lease takes the Fair Market Value of the Cook Station and subtracts the residual value. It is this amount that the lease rentals are then calculated by, reducing the value of the lease rentals.

The residual value is 10% of the Fair Market Value in the Education Sector.

At the end of the lease, your School can continue to rent the equipment or hand the Cook Station back for Tower Leasing to sell on.