leveraged lease

Popular Terms
Three-party lease contract under which a lessor borrows some or most of the funds to finance the asset to be leased to a lessee. In this arrangement, (1) financing provided by the lender is without recourse to the lessor, (2) the lender holds the title to the leased asset, and (3) the lessee's payments are assigned to the lender who can repossess the leased asset in case of a default. Leveraged leases are true (tax oriented) leases because the lessor enjoys all the tax benefits of ownership (such as depreciation) whereas the lessee can claim the full amount of lease payment as expenses.

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