Operating Lease is a contract that allows the use of an asset, but does not convey rights of ownership of the asset. An operating lease is not capitalized; it is accounted for as a rental expense in what is known as "off balance sheet financing." For the lessor, the asset being leased is accounted for as an asset and is depreciated as such. Operating leases have tax incentives and do not result in assets or liabilities being recorded on the lessee's balance sheet, which can improve the lessee's financial ratios.
With an operating lease, you are essentially paying for the usage of the vehicle. At the end of the term the vehicle is simply handed back, avoiding the risks associated with ownership residual value liability.