A Lease with Purchase Option (LOA), often called financial leasing, is a two-part financing product.

For the duration of the contract, it functions like a rental: the company pays a monthly fee to use the vehicle.

However, the key difference lies at the end of the contract.

At the end of the lease term, the company has a choice: 1.

**Exercise the purchase option:** Buy the vehicle for a price that was set at the beginning of the contract, known as the 'residual value'.

2.

**Return the vehicle:** Simply give the vehicle back to the financing company.

Unlike a long-term rental (LLD), services like maintenance and insurance are not typically included in the monthly LOA payment and must be managed separately.

LOA is essentially a flexible path to potential ownership.

It is well-suited for companies that want the lower monthly payments of leasing but also want the option to keep a vehicle at the end of the term if it has proven to be reliable and cost-effective.