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8 Cards in this Set
- Front
- Back
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Lesser
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The user of an asset in a leasing agreement, The lessee makes payments to the lessor.
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Lessor
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The owner of an asset in a leasing agreement. The lessor receives payments from the lessee.
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Operating lease
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Usually a shorter-term lease under which the lessor is responsible for insurance, taxes, and upkeep. May be cancelable by the lessee on short notice.
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Financial lease
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Typically a longer-term, fuly amortized lease under which the lessee is responsible for maintenance, taxes, and insurance. usually not cancelable by the lessee without penalty.
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Tax-oriented lease
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A financial lease in which the lessor is the owner for tax purposes. Also called a true lease or a tax lease.
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Leveraged lease
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A financial lease in which he lessor borrows a substantial fraction of the cost of the leased asset on a nonrecourse basis.
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Sale and leaseback
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A financial lease in which the lessee sells an asset to the lessor and then leases it back.
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Net advantage to leasing (NAL)
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The NPV that is calculated when deciding whether to lease an asset or to buy it.
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