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The following glossary of leasing terminology should assist you when seeking out contract leasing services.
Primary Term is the initial term of the lease agreement. Termination during this period can incur penalties.
Residual Investment, also known as “residual value”, is the value of the asset at the end of the primary lease term.
Off Balance Sheet describes a lease in which the entire lease payment is expensed and therefore does not appear as a liability on the company’s balance sheet. In addition, the acquired equipment does not appear as an asset.
Capital Allowance is the depreciation allowed by a country’s local tax authority and is usually offset against income, thereby potentially reducing tax liability.
Fair Market Value is the current market value of equipment within the open market, i.e. the typical second-user price for the equipment.
Front End/Stepped Rental describes profiled payments. By making low or even zero payments in the early days of a lease, customers may avoid budgetary constraints.
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