What is a common type of lease used for equipment financing?

An equipment lease is specifically designed for the financing of equipment, making it the most fitting choice for this question. This type of lease allows businesses to acquire machinery or technology without the need for a large upfront payment, enabling them to spread the cost over time. It typically involves the leasing company purchasing the equipment and then leasing it to the end-user, who makes periodic payments for the use of the asset.

This type of lease is crucial in various industries where businesses require access to the latest equipment to remain competitive but may not have the capital to purchase it outright. Equipment leases can be structured in various ways, including operating or capital leases, but they fundamentally focus on the usage of equipment.

In contrast, real estate leases pertain to property and land rental rather than equipment, and service leases generally refer to leasing agreements that involve services rather than tangible equipment. Therefore, the characteristics and purpose of equipment leases distinctly highlight why this answer is the most appropriate choice in the context of equipment financing.