ECON 2 Lecture Notes - Lecture 8: Finance Lease, Operating Lease, Leaseback
Document Summary
Lease: contractual agreement between a lessor and a lessee. Gives lessee right to use specific property. Banks: largest players in leasing business, low-cost funds purchase assets at less cost than their competitors, leasing transactions are now quite standardized. Captive leasing companies: primary business is to perform leasing operations for parent company, point-of-sale advantage in finding leasing customers, leasing subsidiary can quickly develop lease-financing agreement, product knowledge. Independents: no point-of-sale access, no low cost of funds advantage, good at developing innovative contracts for lessees. Stimulate sales of lessor"s product whether it be from the dealer (lessor) or a manufacturer (lessor) Often provides tax benefits to various parties in lease: enhances return. Can provide high residual value to the lessor. Lease: contract, or part of a contract, that conveys the right to control the use of identified ppe for a period of time in exchange for consideration.
