The leasing company, investment banker, or broker who arranges a leveraged lease. (U.S. Equipment Leasing Association)

[Compare to Capital or Finance Lease]

A lease which does not transfer substantially all the benefits and risks incident to ownership of property. (KPMG LLP)

[Compare Closed-end Lease]

A lease where a lessee guarantees that the lessor will realize a minimum value from the sale of the asset at the end of the lease. (U.S. Equipment Leasing Association)

In a leveraged lease, the lenders cannot look at the lessor for repayment. The lender’s only recourse is to the lessee and, therefore, the lessee’s credit rating is of prime importance. (U.S. Equipment Leasing Association)

The sum of a series of future cash flows, discounted at an appropriate rate to a current value. (Leasing in Canada [Third Edition], Ralph Selby, FCA, Butterworths, 1999)

A lease wherein payments to the lessor do not include insurance and maintenance, which are paid separately by the lessee. (U.S. Equipment Leasing Association)

Lessee:
The minimum rental payments called for by the lease over the lease term; plus

any guarantee by the lessee of the residual value of the leased property at the end of the lease term; and

any penalty required to be paid by the lessee for failure to renew or extend the lease at the end of the lease term.

If a bargain purchase option exists, then only the minimum rental payments and the bargain purchase option are included in the lease payments.

Lessor:

The minimum lease payments for the lessee as described above and any residual value or rental payments beyond the lease term guaranteed by a third party unrelated to the lessee or lessor.
(KPMG LLP)

A market segment generally represented by financings over $100,000 but under $1 million. Over US$100,000 but under US$2 million in the United States. (U.S. Equipment Leasing Association)

A contract where the lessee leases currently needed assets and is able to acquire other assets under the same basic terms and conditions without negotiating a new contract. (U.S. Equipment Leasing Association)

In this type of lease, the lessor provides an equity portion (usually 20 to 40 percent) of the equipment cost and lenders provide the balance on a nonrecourse debt basis. The lessor receives the tax benefits of ownership. (U.S. Equipment Leasing Association)