Leases consist of a primary rental period, where the monthly payments will add up to the full cost of the asset plus interest.
Once the primary period is up, the asset will normally be near the end of its useful life. At the end of the primary lease period, you will usually have three options:
- Continue to use the asset in a secondary lease period (often with cheaper payments)
- Sell the asset and keep a share of income from the sale
- Return the asset to the lessor