The way a lease works can be described in five steps:
1. A company needs new equipment. It specifies the make, model, and features, and negotiates the price with the manufacturer.
2. The company then negotiates an agreement with a lessor—how much rent, for how long, and what the equipment will be worth at the end of the lease.
3. The equipment is delivered. The company and the lessor make sure it is what was ordered. The lessor pays for it.
4. Rent payments are made by the company, now a lessee, to the lessor.
5. At the end of the lease the lessee may have an option to renew the lease or to buy the equipment.