What typically happens to a portion of the lease payment at the end of the lease period?

At the end of a lease period, it is common practice for a portion of the lease payment to be refunded as a security deposit. This security deposit is typically collected at the beginning of the lease to cover any potential damages or unpaid amounts. When the lease concludes, assuming the asset has been returned in good condition and all lease terms have been satisfied, the lessor will refund this deposit to the lessee. This serves as a form of financial security for both parties throughout the lease term.

In many leases, this arrangement ensures that the lessee is incentivized to return the leased item in good condition, while the lessor has a safeguard against potential losses or damages caused during the lease. This common practice is embedded in the standard leasing agreements for various types of assets, including equipment and vehicles.