Debt displacement

Debt displacement

The amount of borrowing that leasing displaces. Firms that do a lot of leasing are curtailed in their debt capacity.

Debt Displacement

The reduction in a company's ability to borrow because it leases its assets. While debt displacement occurs when a company receives income from its leases, it prevents the company from using those assets as collateral for a loan. Debt displacement can be detrimental, depending on the nature of the business and how much income the leases bring.