Quick answer: Asset leasing lets your business use revenue-producing equipment for a fixed term with predictable payments—without paying the full price upfront. You conserve cash, match costs to revenue, and keep options at the end of term to buy, renew, or return .
The big picture
Asset leasing lets your business use revenue-producing equipment for a fixed term with predictable payments—without paying the full price upfront. You conserve cash, match costs to revenue, and keep options at the end of term to buy, renew, or return. At Mehmi, asset leasing sits within our broader Equipment Financing suite, alongside Equipment Loans, an Equipment Line of Credit, and Refinancing & Sale-Leaseback. We also own the equipment we sell—browse current inventory.
What counts as “assets” in leasing?
Typical leased assets include trucks and trailers, excavators and compact equipment, CNC machines, racking and material handling, restaurant and hospitality equipment, and medical/diagnostic devices. Confirm fit on Eligible Equipment.
Core lease structures (choose by goal)
| Structure | How it works | End-of-term | Best for |
|---|---|---|---|
| FMV (Fair Market Value) | Lowest monthly; you pay for use during the term. | Buy at FMV, renew, or return. | Fast-changing tech or when cash flow is king. |
| Fixed or $10 Buyout | Lease-to-own with a nominal or preset buyout. | Purchase for the fixed amount. | Long-life assets you’ll keep (trucks, yellow iron). |
| Percentage Residual (e.g., 10%) | Lower payments now; known buyout later. | Pay the % to own, or return. | Balanced path to ownership. |
| Conditional Sales Contract (CSC) | Lease-style docs with loan-like economics. | Title per contract at completion. | Simple ownership path with familiar paperwork. |
Learn more: Equipment Leases · Conditional Sales Contracts
BDC’s equipment-financing guide emphasizes the complete financing structure when comparing offers.
“Don’t focus only on interest rates”
For the equipment decision discussed here, compare the amount financed, payment schedule, collateral and remaining obligations alongside the quoted rate.
How the payment is built
Your monthly is a function of the ticket size, term, residual/buyout, rate/fees, and any bundled soft costs (delivery, install, taxes). A higher residual usually lowers the monthly but shifts cost to the end if you buy. Model scenarios in minutes with our calculator.
| Lever | Effect on monthly | Trade-off |
|---|---|---|
| Residual / Buyout | Higher residual → lower payment | Cash (or financing) needed at term end |
| Term length | Longer term → lower payment | Higher total paid over time |
| Upfront cash | More down → lower payment | Reduces liquidity |
| Bundled soft costs | Smooths cash outlay | Raises financed amount slightly |
The end-of-term decision
Every lease ends with a choice to buy, renew, or return/upgrade. FMV provides maximum flexibility; fixed or percentage buyouts give a clear path to ownership. If the buyout is material, you can finance it via an Equipment Loan or use Sale-Leaseback to unlock equity while keeping the unit in service. Details on returns (wear/tear standards, hours/odometer) are in your lease and should be reviewed 90–120 days before maturity.
The step-by-step process
- Select equipment: Choose from Mehmi’s in-house inventory or ensure the asset is eligible.
- Estimate payments: Use the calculator (e.g., 48 vs 60 months; FMV vs fixed residual).
- Apply: Provide ownership details, bank statements, and a quote/spec sheet. Startups can use In-House Financing.
- Approval and funding timelines vary by lender, application completeness, and required conditions.
- Fund & deliver: We coordinate payout and delivery; you insure and accept the asset.
- Operate & plan: Track hours/mileage; calendar a pre-return review well before maturity.
Lease vs loan vs sale-leaseback (at a glance)
| Option | Ownership during term | Monthly cost | Cash impact | End of term | Use case |
|---|---|---|---|---|---|
| Lease (FMV / Fixed / % Residual) | Lessor | Lower | Low to moderate upfront | Buy, renew, or return | Cash-flow focus; upgrades expected |
| Loan | Borrower | Moderate | Down payment common | Own outright | Keep the asset many years |
| Sale-Leaseback | Lessor (you lease it back) | Varies | Cash received up front | Buyout/renew/return | Unlock equity in owned gear |
Explore: Equipment Leases · Equipment Loans · Refinancing & Sale-Leaseback
Industry snapshots
- Transportation & Trucking: Lower monthlies while scaling lanes; see Transportation & Trucking.
- Construction & Contractors: Match payments to project revenue; see Construction & Contractors.
- Manufacturing & Wholesale: Align fixed buyouts to useful life; see Manufacturing & Wholesale.
- Hospitality & Food Service: Use FMV or Rent-to-Own (Hospitality) to preserve cash; see Hospitality & Food Service.
- Medical, Dental & Wellness: Finance imaging/diagnostic upgrades on set refresh cycles; see Medical, Dental & Wellness.
Accounting and tax notes (Canada)
Most SMEs care about cash flow and after-tax cost. Lease payments are commonly deductible as an expense; buying with a loan enables CCA depreciation plus interest deductions. Treatment varies by structure and reporting standard (ASPE/IFRS). Coordinate with your accountant before you sign.
Case study: Balanced residual, stronger cash position
A GTA fabricator needed a CNC and dust collection upgrade. We structured 60 months with a modest fixed residual, rolling install and taxes into the lease. Monthlies landed below a comparable loan, production ramped on schedule, and the client plans to exercise the buyout at term end. If cash tightens, the residual can be financed via an equipment loan or converted through sale-leaseback while the machine stays in service.
FAQs: Asset leasing
Is leasing always cheaper than buying?
Monthly—often yes. Lifetime cost—sometimes no if you’ll keep the asset well beyond term. Compare in our calculator.
Can I lease used assets?
Often yes, subject to age/condition and secondary-market strength. Check Eligible Equipment.
What affects my payment most?
Residual, term, rate/fees, asset type/age, and whether you bundle soft costs. See Equipment Leases.
What if I need frequent purchases?
Use an Equipment Line of Credit to streamline repeat acquisitions.
How do I handle end-of-term?
Buy, renew, or return—decide 90–120 days pre-maturity. If buying, consider an Equipment Loan or Sale-Leaseback.
Do startups qualify?
Yes—with newer assets, reasonable terms, and In-House Financing or a modest down payment.
Model 48 vs 60 months and different residuals in the Equipment Financing Calculator, then feel free to contact our credit analysts for a tailored structure via Contact Us.
Authoritative references
- Innovation, Science and Economic Development Canada — Canada Small Business Financing Program:
The Canada Small Business Financing Program makes it easier for small businesses to get loans from financial institutions by sharing the risk with lenders.
Program eligibility, lender criteria, tax treatment, and product terms can change. Verify current official guidance and the final financing documents before making a decision.