A finance lease is a long-term and non-cancellable agreement. The lessee is responsible for maintaining the asset and paying any insurance and taxes associated with it. The equipment is recorded in the lessee’s balance sheet during the lease period.
Businesses prefer this type of lease when needing expensive capital equipment that they may not have the funds to purchase immediately.
Equipment lease can be used to refinance assets owned by businesses to be acquired as part of the acquisition financing.