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leveraged lease

   Also found in: Wikipedia 0.06 sec.
Leveraged lease
A lease arrangement under which the lessor borrows a large proportion of the funds needed to purchase the asset. The lender has a lien on the assets and a pledge of the lease payments to secure the borrowing.

leveraged lease
A long-term lease in which a major part of the purchase price of the to-be-leased asset is financed by a third party. Thus, the lessor uses a combination of its own funds and borrowed money in order to purchase the asset that is then leased to another party.


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FASB has issued a staff position that requires companies to recalculate their leveraged leases if there is a change in the timing of cash flows relating to income taxes generated by the leveraged lease.
Using a structure known as a leveraged lease, cash-rich investors such as Burbank-based Disney purchased airplanes, individually or in a pool, and leased them out to air carriers.
Simply put, a leveraged lease is a transaction where the lessor puts in a part (usually 20-40 percent) of the funds necessary to purchase the equipment and a third party lender supplies the remainder, hence the lessor's investment is leveraged with third party debt.
 
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