 |
| Direct lease |
| You identify the asset (and negotiate the price) and arrange for the leasing company to buy it from the manufacturer (if new) or the previous owner (if used) to rent it to you. (see also sale-and-leaseback) |
| Economic life (useful life) |
| The period of time during which an asset has economic value and is usuable. |
| Fair Market Value |
| Price at which an asset is sold and bought in the open market. |
| Lease |
| A lease is a contract in which the lessor purchases the asset selected by you and conveys the use of an asset to you for a specific period of time at a predetermined rate. |
| Lease Rate |
| The periodic rental payment to the lessor for the use of the asset. The lease rate is primarily determined by the total cost of the asset, the duration of the lease and the interest rate level. |
| Lessee |
| The lessee is the user of the asset being leased, i.e. you. |
| Lessor |
| The lessor is the party who has legal or tax title to the equipment, grants the lessee the right to use the equipment for the lease term, and is entitled to the rentals, i.e. the leasing company. |
| Master lease |
| A contractual arrangement which allows you to lease other assets under the same basic terms and conditions without negotiating a new contract. |
| Purchase option |
| A provision by which you have the right to purchase the asset at the end of the lease term, either at a predetermined amount or its fair market value. |
| Residual value |
| The resale value of the asset at the end of the lease. |
| Sale-and-leaseback (also called purchase leaseback) |
| You sell an asset you already own to the leasing company for fair market value or book written down value (whichever is less) and then lease it back (see also direct lease). |
|
|||||||||||||||||||||
|