Lease financing allows firms to use assets through rental payments rather than buying them outright. There are two parties in a lease: the lessor who owns the property, and the lessee who obtains use of the property in exchange for rental payments. The main types of leases are operating leases, financial/capital leases, sale-and-leaseback arrangements, and combination leases. Lessees must evaluate whether leasing an asset is less costly than buying by comparing the present value of leasing cash flows to owning cash flows. Lessors evaluate potential leases based on determining costs and cash flows to ensure adequate return on their investment. Tax benefits also factor into the lease decision-making process for both parties.