What financing method involves renting equipment owned by another party?

Leasing is a financing method where a business can rent equipment or assets owned by another party, typically a leasing company. This allows the business to utilize the equipment without the need for a significant upfront investment to purchase it outright. Leasing agreements often come with specific terms related to the duration of use and payments required, making it an attractive option for businesses that need access to certain equipment but wish to keep capital expenditures low.

This method provides flexibility, as businesses can upgrade their equipment as needed without incurring the full costs associated with outright ownership. By using leasing, companies can also maintain their cash flow and redirect their resources towards other operational needs or investments.