There are two types of leases typically used for equipment financing and they are Operating Lease and Finance Lease. The Operating Lease provides "off balance sheet" treatment of the assets. The term of the lease is shorter than the perceived useful life of the equipment and the payment stream does not cover the lessor's original equipment cost. The Operating Lease allows the user to return the equipment at the end of lease with no further obligation, while the lessor assumes the end of term residual risk. This type of lease allows for flexibility and managing equipment obsolescence. The Finance Lease is characterized by a longer lease period, during which lease payments more completely cover the lessor's original equipment costs.