Leasing is a contractual arrangement between the lessee (user) and a lessor (owner) where the lessee pays a monthly rental for the use of the asset. The lessee may use the asset over a given period of time as determined by the terms of the contract. This may range from 1 to 7 years. The lessee has the option to own the asset at the end of the lease period by making a final payment for the residual value.