Leasing and financing heavy equipment are similar in that the person obtaining the equipment won’t need to purchase the machinery outright before using it. Instead, the leasee or borrower makes monthly payments on the equipment.

But financing and leasing also have their differences. For example, an equipment lease has a fixed term with a monthly rental fee that can’t be paid off early, while an equipment loan can be paid off early, with any remaining interest wiped clean.

Leasing also allows you to use the equipment itself as collateral, while you may need to provide additional collateral to secure equipment financing.

There are multiple structures available for equipment leasing. Depending on the structure, at the end of the lease you may either own the equipment in full, exercise the option to purchase the equipment, or return the equipment.