leveraged lease

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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.
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Leveraged Lease

A lease in which a bank or other financial institution provides the lessor (the party granting the lease and retaining title to the lease good) with credit, which the lessor then uses to finance the lease. For example, suppose a car dealer (lessor) extends a lease to someone buying a car (lessee). The lessor may take a loan from a bank in order to receive capital from the lease of the car while the lessee drives away with the car. The lessee then makes payments on the lease, which the lessor then uses to repay the loan to the bank. Importantly, the lessor may take the leased asset away from the lessee if the lessee defaults, and the bank may do the same if the lessor defaults.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved

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.
Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott. Copyright © 2003 by Houghton Mifflin Company. Published by Houghton Mifflin Company. All rights reserved. All rights reserved.
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Equipment leases can be classified as (A) Nontax-Oriented Leases or Tax-Oriented Leases; (B) Single-Investor Leases or Leveraged Leases; and (C) Full Payout Leases or Operating Leases.
There are many others involving issues such as derivative accounting, pooled interests and leveraged leases that are neither easily explainable nor easily justified.
One example is the accounting for leveraged leases.
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.
Consists of retail and wholesale credits and capital and leveraged leases.
The separate phases method of accounting for leveraged leases: Properties of the allocating rate and an algorithm for finding it.
Leveraged leases can be a complex and intricate vehicle for financing equipment in today's marketplace.
There is a special rule for leveraged leases: an unrelated person may guarantee without recourse to the lessor the lessor's payments of principal and interest.
This applies to leveraged leases (where the lessee retains tax benefits) and it is aimed at further tightening the definition of a lease; however, these finance lease laws don't actually go into effect until 1987.
ED2 would eliminate existing leveraged lease accounting by the lessor and would also require the lessor to apply the R&R approach to existing leveraged leases retrospectively.
Non-interest income declined to USD48.1m in January-March 2012 from USD53.9m a year earlier, including a previously disclosed gain of USD3.5m on the early termination of leveraged leases for two cargo ships and a loss of USD1m on the sale and termination of an aircraft lease.