What Is a Leveraged Lease?

Leveraged lease is one of the special forms of financial lease. It is an agreement arrangement among the lessee, lessor and lender. The characteristics are: the lessee uses the assets and pays the rent on a regular basis. The lessor purchases the assets, delivers them to the lessee, and collects the rent periodically. However, the amount of capital contributed by the lessor is not less than 20% -40% of the price of the asset. The lender provides the remaining funds and charges the lessor interest. This type of loan has no recourse. Once the lessee defaults, the lessor has no obligation to pay the debt to the lender, but the lender can protect itself in two ways: (1) having the first lien on the leased asset; (2) if The lessor defaults on the debt and the lessee must pay the rent directly to the lender. ^[1]

Leveraged lease

Leveraged Lease is also known as Third-party Equity Lease,

Leveraged leasing involves at least three people: the lender,

Stimulate rental companies to buy rent

Some leased items are too expensive, and the leasing company is unwilling or unable to buy and lease them on their own. Leveraged leases are often the only feasible way to lease these items.

Reduce lessor lease costs

Government regulations in capitalist countries such as the United States,

1. Have all the conditions of real lease;

2.

on

1. owner

The lessee submits the lease application to the leasing company, indicating the financing intention; the leasing company introduces the company's business processes to the customer, and collects the customer's information and documents.