How does Lease-Purchase Financing differ from True Leasing?
To a municipal lessee, the difference between lease-purchase financing and true leasing is who owns or will own the asset. In a lease-purchase, the lessee acquires an ownership interest in the asset, usually obtaining title to the asset at the inception of the lease term. In a true lease, the lessee acquires only the right to use the asset for a period of time, but no ownership of the asset. The term of a true lease is usually much shorter than the useful life of the asset, while the term of a lease-purchase generally mirrors its useful life. The term length differs because of what happens at the end of the term. With a true lease, the municipality typically relinquishes the asset but may purchase it at a price that reflects its residual or market value. With a lease-purchase, the municipality retains the asset.

How does a Master Lease Agreement differ from a Lease-Purchase Agreement?
A lease-purchase agreement is typically used for the lease financing of a single asset, or a single group of assets, which are financed at relatively the same time. Provisions within a lease-purchase agreement do not allow for equipment additions or upgrades at subsequent dates.

A Master Lease Agreement allows for a series of equipment to be acquired at one period of time and allows for additional equipment or other personal property to be acquired in subsequent periods, without executing a new, full set of documents. Each subsequent financing is given its own payment and amortization schedule. A Master Lease Agreement is best suited for a public organization that finances equipment that is subject to technological upgrades, or that makes frequent use of lease purchases.