Leasing Glossary

Accelerated Cost Recovery System (ACRS)
The tax depreciation, or cost recovery, method for Internal Revenue Service (IRS) purposes, which was introduced by the 1981 Economic Recovery Tax Act and was effective for all depreciable property placed in service after December 31, 1980 and before January 1, 1987. ACRS replaced the Asset Depreciation Range (ADR) system and was replaced itself by the Modified Accelerated Cost Recovery System (MACRS) of the 1986 Tax Reform Act.

Accelerated Depreciation
Any depreciation method that allows for greater deductions or charges in the earlier years of an asset's depreciable life, with charges becoming progressively smaller in each successive period. Examples would include the double declining balance and sum-of-the-years digits methods.

Accumulated Depreciation
A financial reporting term for a contra-asset balance sheet account that shows the total depreciation charges for an asset since acquisition.

Actuarial Interest
A constant interest charge (or return) based upon a declining principal balance.

Adjusted (or Remaining) Basis
The undepreciated amount of an asset's original basis that is used, for tax purposes, to calculate the gain or loss on disposition of an asset.

ADR System
A tax depreciation system that establishes the minimum, midpoint and maximum number of years, by asset category, over which an asset can be depreciated. The midpoint life has become synonymous with the term "ADR classlife".

Advance Payments
One or more lease payments required to be paid to the lessor at the beginning of the lease term. Lease structures commonly require one payment to be made in advance.

Alternative Minimum Tax (AMT)
A penalty tax of sorts, in which a taxpayer must pay the higher of its regular tax or AMT liability. The corporate AMT rate, although lower than the regular tax rate, is applied to a different, typically higher, taxable income than for regular taxes. The Tax Reform Act of 1986 substantially modified the AMT, which must be calculated for all taxpayers.

Annuity
A stream of even (equal) cash flows occurring at regular intervals, such as even monthly lease payments. An annuity in advance is one in which the annuity payment is due at the beginning of each period. An annuity in arrears is one in which the annuity payment is due at the end of each period.

Asset Classlife
The updated ADR midpoint life as modified by the 1986 Tax Reform Act. An asset classlife represents the IRS designated economic life of an asset, and is used as the recovery period for alternative tax depreciation computations.

Assign
To transfer or exchange future rights. In leasing, the right to receive future lease payments in a lease is usually transferred to a funding source, in return for up-front cash. The up-front cash represents the loan proceeds from the funding source, and is equal to the present value of the future lease payments discounted at the leasing company's cost of borrowing. A lease assigned by the lessor to a funding source is called an assigned lease. The assignment of leases is a very common funding technique used by leasing companies.

Bargain Purchase Option
A lease provision allowing the lessee, at its option, to purchase the leased property at the end of the lease term for a price that is sufficiently lower than the expected fair market value of the property, such that exercise of the option appears, at the inception of the lease, to be reasonably assured.

Bargain Renewal Option
A lease provision allowing the lessee, at its option, to extend the lease for an additional term in exchange for periodic rental payments that are sufficiently less than fair value rentals for the property, such that exercise of the option appears, at the inception of the lease, to be reasonably assured.

Basis
The original cost of an asset plus other capitalized acquisition costs such as installation charges and sales tax. Basis reflects the amount upon which depreciation charges are computed.

Basis Point
One one-hundredth of a percent (.01%).

Bundled Lease
A lease that includes many additional services such as maintenance, insurance and property taxes that are paid for by the lessor, the cost of which is built into the lease payments.

Call Option
An option in a lease, such as a purchase or a renewal option, that is exercised at the discretion of the lessee, not the lessor.

Capital Lease
From a financial reporting perspective, a lease that has the characteristics of a purchase agreement, and also meets certain criteria established by Financial Accounting Standards Board Statement No. 13 (FASB 13). Such a lease is required to be shown as an asset and a related obligation on the balance sheet of the lessee.

Capitalize
To record an expenditure that may benefit future periods as an asset rather than as an expense to be charged off in the period of its occurrence.

Capitalized Cost
The amount of an asset to be shown on the balance sheet, from a financial reporting perspective. The total capitalized cost (or basis) also is the amount upon which tax benefits, such as MACRS depreciation deductions, are based and may include asset cost plus other amounts such as sales tax.

Captive Lessor
A leasing company that has been set up by a manufacturer or dealer of equipment to finance the sale or lease of its own products to end-users or lessees.

Certificate of Delivery and Acceptance
A document that is signed by the lessee to acknowledge that the equipment to be leased has been delivered and is acceptable. Many lease agreements state that the actual lease term commences once this document has been signed.

Closed-End Lease
A lease that does not contain a purchase or renewal option, thereby requiring the lessee to return the equipment to the lessor at the end of the initial lease term.

Commitment Fee
A fee required by the lessor, at the time a proposal or commitment is accepted by the lessee, to lock in a specific lease rate and/or other lease terms.

Commitment Letter
A document prepared by the lessor that sets forth its commitment, including rate and term, to provide lease financing to the lessee. This document, if utilized, precedes final documentation, and may or may not be subject to lessor credit approval.

Compensating Balances
The amount of funds that a bank requires a borrower to keep on deposit during the term of a loan. The amount of this noninterest earning deposit is typically based upon some percentage of the loan and effectively increases the borrower's interest cost.

Conditional Sales Contract
An agreement for the purchase of an asset in which the lessee is treated as the owner of the asset for federal income tax purposes (thereby being entitled to the tax benefits of ownership, such as depreciation), but does not become the legal owner of the asset until all terms and conditions of the agreement have been satisfied.

Cost of Capital
The weighted-average cost of funds that a firm secures from both debt and equity sources in order to fund its assets. The use of a firm's cost of capital is essential in making accurate capital budgeting and project investment decisions.

Cost of Debt
The costs incurred by a firm to fund the acquisition of assets through the use of borrowings. A firms's component cost of debt is used in calculating the firm's overall weighted-average cost of capital.

Cost of Equity
The return on investment required by the equity holders of a firm. Cost of equity can be calculated using any number of different theoretical approaches and must take into consideration the current and long-term yield requirements of a firm's investors. A firm's component cost of equity is used in calculating the firm's overall weighted-average cost of capital.

Debt Optimization
A method of borrowing funds in a leveraged lease where the equity participants borrow and repay the obligation in such a manner as to maximize their return on equity , maintain a constant return while offering a lower lease payment, maximize cash flow, etc., or to maximize a combination of factors.

Declining Balance Depreciation
A type of accelerated depreciation in which a constant percentage of an asset's declining remaining basis is depreciated each year. The constant percentage amount is often calculated at 125%, 150% or 200% (double declining balance) of the straight-line percentage over the same recovery period.

Depreciation
A means for a firm to recover the cost of a purchased asset, over time, through periodic deductions or offsets to income. Depreciation is used in both a financial reporting and tax context, and is considered a tax benefit because the depreciation deductions can cause a reduction in taxable income, thereby lowering a firm's tax liability.

Direct Financing Lease
A lessor capital lease (per FASB 13) that does not give rise to manufacturer's or dealer's profit (or loss) to the lessor.

Discount Rate
A certain interest rate that is used to bring a series of future cash flows to their present value in order to state them in current, or today's, dollars. Use of a discount rate removes the time value of money from future cash flows.

Discounted Lease
A lease in which the lease payments are assigned to a funding source in exchange for up-front cash to the lessor.

Dry Lease
A net lease. This term is traditionally used in aircraft and marine leasing to describe a lease agreement that provides financing only and, therefore, requires the lessee to separately procure personnel, fuel and provisions necessary to operate the craft.

Early Termination
Occurs when the lessee returns the leased equipment to the lessor prior to the end of the lease term, as permitted by the original lease contract or subsequent agreement. At times, this may result in a penalty to the lessee.

Economic Recovery Tax Act of 1981 (ERTA '81)
The federal tax act that introduced ACRS, among other provisions.

End-of-Term Options
Options stated in the lease agreement that give the lessee flexibility in its treatment of the leased equipment at the end of the lease term. Common end-of-term options include purchasing the equipment, renewing the lease or returning the equipment to the lessor.

Equipment Schedule
A document, incorporated by reference into the lease agreement, that describes in detail the equipment being leased. The schedule may state the lease term, commencement date, repayment schedule and location of the equipment.

Equipment Specifications
A specific description of a piece of equipment that is to be acquired, including, but not limited to, equipment make, model, configuration and capacity requirements.

Equity Investor
An entity that provides equity funding in a leveraged lease transaction and thereby becomes the owner and ultimate lessor of the leased equipment.

Executory Costs
Recurring costs in a lease, such as insurance, maintenance and taxes for the leased property, whether paid by the lessor or the lessee. Executory costs also include amounts paid by the lessee in consideration for a third-party residual guarantee, as well as any profits realized by the lessor on any executory costs paid by the lessor and passed on to the lessee.

External Rate of Return (ERR)
A method of yield calculation. ERR is a modified internal rate of return (IRR) that allows for the incorporation of specific reinvestment, borrowing and sinking fund assumptions.

Fair Market Value
The value of a piece of equipment if the equipment were to be sold in a transaction determined at arm's length, between a willing buyer and a willing seller, for equivalent property and under similar terms and conditions.

FASB 13
Financial Accounting Standards Board Statement No. 13, 'Accounting for Leases'. FASB 13, along with its various amendments and interpretations, specifies the proper classification, accounting and reporting of leases by lessors and lessees.

Finance Lease
An expression oftentimes used in the industry to refer to a capital lease or a nontax lease. It is also a type of tax-oriented lease that was introduced by the Tax Equity and Fiscal Responsibility Act of 1982, to be effective in 1984, but later repealed by the Tax Reform Act of 1986.

Financial Accounting Standards Board (FASB)
The rule-making body that establishes financial reporting guidelines.

Financial Institution Lessor
A type of independent leasing company that is owned by, or a part of, a financial institution, such as a commercial bank, thrift institution, insurance company, industrial loan company or credit union.

Financing Statement
A notice of a security interest filed under the Uniform Commercial Code (UCC).

Full-payout Lease
A lease in which the lessor recovers, through the lease payments, all costs incurred in the lease plus an acceptable rate of return, without any reliance upon the lease equipment's future residual value.

Full-service Lease
A lease that includes many additional services such as maintenance, insurance and property taxes that are paid for by the lessor, the cost of which is built into the lease payments.

Funding Source
An entity that provides any part of the funds used to pay for the cost of the leased equipment. Funds can come from either an equity funding source, such as the ultimate lessor in a lease transaction, or a debt funding source, such as a bank or other lending institution.

Guaranteed Residual Value
A situation in which the lessee or an unrelated third party (e.g., equipment manufacturer, insurance company) guarantees to the lessor that the leased equipment will be worth a certain fixed amount at the end of the lease term. The guarantor agrees to reimburse the lessor for any deficiency realized if the leased equipment is subsequently salvaged at an amount below the guaranteed residual value.

Guideline Lease
A tax lease that meets or follows the IRS guidelines, as established by Revenue Ruling 75-21, for a leveraged lease.

Half-Year Convention
A tax depreciation convention that assumes all equipment is purchased or sold at the midpoint of a taxpayer's tax year. The half-year convention allows an equipment owner to claim a half-year of depreciation deductions in the year of acquisition, as well as in the year of disposition, regardless of the actual date within the year that the equipment was placed in service, or disposed of.

Implicit Rate
The discount rate that, when applied to the minimum lease payments (excluding executory costs) together with any unguaranteed residual, causes the aggregate present value at the inception of the lease to be equal to the fair market value (reduced by any lessor retained Investment Tax Credits) of the leased property.

Independent Lessor
A type of leasing company that is independent of any one manufacturer, and, as such, purchases equipment from various unrelated manufacturers. The equipment is then leased to the end-user or lessee. This type of lessor is also referred to as a third-party lessor.

Initial Direct Costs
Costs incurred by the lessor that are directly associated with negotiating and consummating a lease. These costs include, but are not necessarily limited to, commissions, legal fees, costs of credit investigations, the cost of preparing and processing documents for new leases acquired and so forth.

Interim Rent
A charge for the use of a piece of equipment from its in-service date, or delivery date, until the date on which the base term of the lease commences. The daily interim rent charge is typically equal to the daily equivalent of the base rental payment. The use of interim rent allows the lessor to have one common base term commencement date for a lease agreement having multiple deliveries of equipment.

Internal Rate of Return (IRR)
The unique discount rate that equates the present value of a series of cash inflows (i.e., lease payments, purchase option) to the present value of the cash outflows (equipment or investment cost). IRR is the most common method used to compute yields.

Investment Tax Credit (ITC)
A credit that a taxpayer is permitted to claim on the federal tax return (a direct offset to tax liability) as a result of ownership of qualified equipment. ITC was generally repealed by the Tax Reform Act of 1986, for all equipment placed in service after 1985.

Lease Acquisition
The process whereby a leasing company purchases or acquires a lease from a lease originator, such as a lease broker or leasing company.

Lease Agreement
The contractual agreement between the lessor and the lessee that sets forth all the terms and conditions of the lease.

Lease Broker
An entity that provides one or more services in the lease transaction, but that does not retain the lease transaction for its own portfolio. Such services could include finding the lessee, working with the equipment manufacturer, securing debt financing for the lessor to use in purchasing the equipment and locating the ultimate lessor or equity participant in the lease transaction. The lease broker is also referred to as a packager.

Lease Origination
The process of uncovering (through a sales force), developing and consummating lease transactions. Steps in the process could include, but are not limited to, prospecting for new lease business, pricing potential transactions, performing credit reviews and completing the necessary documentation.

Leveraged Lease
A specific form of lease involving at least three parties: a lessor, lessee and funding source. The lessor borrows a significant portion of the equipment cost on a nonrecourse basis by assigning the future lease payment stream to the lender in return for up-front funds (the borrowing). The lessor puts up a minimal amount of its own equity funds (the difference between the equipment cost and the present value of the assigned lease payments) and is generally entitled to the full tax benefits of equipment ownership.

MACRS Classlife
The specific tax cost recovery (depreciation) period for a class of assets as defined by MACRS. Asset classlives (ADR midpoint lives) are used to determine an asset's MACRS classlife and, hence, its recovery period.

Maintenance Contract
An agreement whereby the lessee contracts with another party to maintain and repair the leased property during the lease term, in exchange for a payment or stream of payments.

Master Lease
A lease line of credit that allows a lessee to obtain additional leased equipment under the same basic lease terms and conditions as originally agreed to, without having to renegotiate and execute a new lease contract with the lessor. The actual lease rate for a specific piece of equipment will generally be set upon equipment delivery to the lessee.

Match Funded Debt
Debt incurred by the lessor to fund a specific piece of leased equipment, the terms and repayment of which are structured to correspond to the repayment of the lease obligation by the lessee.

Midquarter Convention
A depreciation convention (replacing half-year convention for certain taxpayers in certain years) that assumes all equipment is placed in service halfway through the quarter in which it was actually placed in service. Allowable acquisition and disposition year depreciation deductions are pro rated based upon the midquarter date of the quarter in which the asset was placed in service.

Minimum Lease Payments
From the lessee perspective, all payments that are required to be made, may be required to be made or, in all probability, will be made to the lessor per the lease agreement. Minimum lease payments for the lessee include, but are not limited to, the lease payments (excluding executory costs) during the noncancellable lease term, bargain purchase options, any put purchase options, the amount of any lessee residual guarantees and nonrenewal penalties that are insufficiently severe to cause renewal. Minimum lease payments for the lessor include all payments to be received from the lessee, as described above, as well as the amount of any residual guarantees by unrelated third-party guarantors.

Modified Accelerated Cost Recovery System (MACS)
The current tax depreciation system as introduced by the Tax Reform Act of 1986, generally effective for all equipment placed in service after December 31, 1986.

Money-Over-Money Lease
A nontax lease. This type of lease is a conditional sales contract in the guise of a lease, in which the lessee is, or will become, the owner of the leased equipment by the end of the lease term, and, therefore, is entitled to the tax benefits of ownership.

Multiple Investment Sinking Fund (MISF)
A conditional sales contract disguised in the form of a lease available only to municipalities, in which the interest earnings are tax-exempt to the lessor.

Net Lease
A lease in which all costs in connection with the use of the equipment, such as maintenance, insurance and property taxes, are paid for separately by the lessee and are not included in the lease rental paid to the lessor.

Net Present Value
The total discounted value of all cash inflows and outflows from a project or investment.

Nonrecourse
A type of borrowing in which the borrower (a lessor in the process of funding a lease transaction) is not at-risk for the borrowed funds. The lender expects repayment from the lessee and/or the value of the leased equipment; hence, the lender's credit decision will be based upon the creditworthiness of the lessee, as well as the expected value of the leased equipment.

Nontax Lease
A type of lease in which the lessee is, or will become, the owner of the leased equipment, and, therefore, is entitled to all the risks and benefits (including tax benefits) of equipment ownership.

Off Balance Sheet Financing
Any form of financing, such as an operating lease, that, for financial reporting purposes, is not required to be reported on a firm's balance sheet.

Open-End Lease
A lease in which the lessee guarantees the amount of the future residual value to be realized by the lessor at the end of the lease. If the equipment is sold for less than the guaranteed value, the lessee must pay the amount of any deficiency to the lessor. This lease is referred to as open-end because the lessee does not know its actual cost until the equipment is sold at the end of the lease term.

Operating Budget
A budget that lists the amount of noncapital goods and services a firm is authorized by management to expend during the operating period.

Operating Lease
From a financial reporting perspective, a lease that has the characteristics of a usage agreement and also meets certain criteria established by the FASB. Such a lease is not required to be shown on the balance sheet of the lessee. The term is also used to refer to leases in which the lessor has taken a significant residual position in the lease pricing and, therefore, must salvage the equipment for a certain value at the end of the lease term in order to earn its rate of return.

Payments in Advance
A payment stream in which each lease payment is due at the beginning of each period during the lease.

Payments in Arrears
A payment stream in which each lease payment is due at the end of each period during the lease.

Payoff
Occurs when the lessee purchases the leased asset from the lessor prior to the end of the lease term.

Placed in Service
Delivered and available for use, although the equipment may still be subject to final installation and/or assembly.

Point
One percent, or one percentage point (1.00%). A point also represents 100 basis points.

Pooled Funds
A funding technique used by lessors in which several forms of borrowing are pooled, or grouped, for use in funding leases and are not specifically tied to the purchase of one piece of leased equipment.

Present Value
The discounted value of a payment or stream of payments to be received in the future, taking into consideration a specific interest or discount rate. Present value represents a series of future cash flows expressed in today's dollars.

Pricing
Arriving at the periodic rental amount to charge a lessee. A lessor must factor many variables into its pricing, which may include lease term, lessor targeted yield, security deposits, residual value and tax benefits.

Purchase Option
An option in the lease agreement that allows the lessee to purchase the leased equipment at the end of the lease term for either a fixed amount or at the future fair market value of the leased equipment.

Put Option
An option in a lease (e.g., for equipment purchase or lease renewal) in which the exercise of the option is at the lessor's, not the lessee's, discretion.

Recourse
A type of borrowing in which the borrower (a lessor funding a lease) is fully at-risk to the lender for repayment of the obligation. The recourse borrower (lessor) is required to make payments to the lender whether or not the lessee fulfills its obligation under the lease agreement.

Refundable Security Deposit
An amount paid by the lessee to the lessor as security for fulfillment of all obligations outlined in the lease agreement that is subsequently refunded to the lessee once all obligations have been satisfied. Security deposits are typically returned at the end of the lease term but, according to mutual agreement, can be refunded at any point during the lease.

Remarketing
The process of selling or leasing the leased equipment to another party upon termination of the original lease term. The lessor can remarket the equipment or contract with another party, such as the manufacturer, to remarket the equipment in exchange for a remarketing fee.

Renewal Option
An option in the lease agreement that allows the lessee to extend the lease term for an additional period of time beyond expiration of the initial lease term, in exchange for lease renewal payments.

Residual Value
The value, either actual or expected, of leased equipment at the end, or termination, of the lease.

Retained Transaction
A lease transaction or investment kept for one's own portfolio; a retained transaction is not sold to another lessor or investor.

Return on Assets (ROA)
A common measure of profitability based upon the amount of assets invested; ROA is equal to the ratio of either: (1) net income to total assets or (2) net income available to common stockholders to total assets.

Return on Equity (ROE)
A measure of profitability related to the amount of invested equity; ROE is equal to the ratio of either: (1) net income to owners' equity or (2) net income available to common stockholders to common equity.

Rule of 78
An accelerated method of allocating periodic earnings in a lease (or a loan) based upon the sum-of-the-years method.

Running Rate
The rate of return to the lessor, or cost to the lessee, in a lease based solely upon the initial equipment cost and the periodic lease payments, without any reliance on residual value, tax benefit, deposits or fees. This rate is referred to also as the street or stream rate.

Sale-Leaseback
A transaction that involves the sale of equipment to a leasing company and a subsequent lease of the same equipment back to the original owner, who continues to use the equipment.

Sales-Type Lease
A capital lease from the lessor's perspective (per FASB 13) that gives rise to manufacturer's or dealer's profit to the lessor.

Salvage Value
The expected or realized value from selling a piece of equipment.

Single Investor Lease
A lease in which the lessor is fully at-risk for all funds (both equity and pooled funds) used to purchase the leased equipment.

Sinking Fund
A reserve set aside for the future payment of taxes (generally applicable only in leveraged leases), or for the purpose of payment of any liability anticipated to become due at a future date.

Sinking Fund Rate
The earnings rate allocated to a sinking fund.

Skipped-Payment Lease
A lease that contains a payment stream requiring the lessee to make payments only during certain periods of the year.

Step-Payment Lease
A lease that contains a payment stream requiring the lessee to make payments that either increase (step-up) or decrease (step-down) in amount over the term of the lease.

Stipulated Loss Value Table
A schedule included in the lease agreement, generally used for purposes of minimum insurance coverage, that sets forth the agreed-upon value of the leased equipment at various points throughout the lease term. This value establishes the liability of the lessee to the lessor in the event the leased equipment is lost or becomes unusable due to casualty loss during the lease term.

Straight-line Depreciation
A method of depreciation (for financial reporting and tax purposes) where the owner of the equipment claims an equal amount of depreciation in each year of the equipment's recovery period.

Structuring
Pulling together the many components of a lease to arrive at a single lease transaction. Structuring includes, but is not limited to, lease pricing, end-of-term options, documentation issues, indemnification clauses, funding and residual valuations.

Subchapter S Corporation
A firm legally organized as a corporation but taxed as a partnership.

Takeout
A flexible lease option in which the lessor replaces existing leased equipment with either different equipment or newer equipment of the same make.

Tax Equity and Fiscal Responsibility Act of 1982 (TEFRA '82)
Tax law enacted in 1982 that, among other things, modified the Accelerated Cost Recovery System (ACRS) and Investment Tax Credit (ITC) rules, as well as introduced the finance lease (which has since been repealed).

Tax Lease
A generic term for a lease in which the lessor takes on the risks of ownership (as determined by various IRS pronouncements) and, as the owner, is entitled to the benefits of ownership, including tax benefits.

Tax Reform Act of 1984 (TRA '84)
Tax law enacted in 1984 that included changes to the general effective date for finance leases (renamed transitional finance leases), defined limited use property, set forth the luxury automobile rules and placed restrictions on equipment leases to tax-exempt users.

Tax Reform Act of 1986 (TRA '86)
Recent tax law that effected a major overhaul of the US tax system by lowering tax rates, modifying the Accelerated Cost Recovery System (now MACRS), repealing the Investment Tax Credit (ITC) and repealing the transitional finance lease.

Tax-Exempt User Lease
A type of tax lease available to tax-exempt or nonprofit entities, in which the lessor receives only limited tax benefits.

Terminal Rental Adjustment Clause (TRAC)
A lessee guaranteed residual value for vehicle leases (automobiles, trucks or trailers), the inclusion of which will not, in and of itself, disqualify the tax lease status of a tax-oriented vehicle lease.

Third-Party Lessor
An independent leasing company, or lessor, that writes leases involving three parties: (1) the unrelated manufacturer, (2) the independent lessor and (3) the lessee.

Ticket Size
Refers to the cost of equipment being leased. The leasing market place is roughly segmented into the small, middle and large ticket markets.

True Lease

Two-Party Lessor
A captive leasing company, or lessor, that writes leases involving two parties: (1) the consolidated parent and captive leasing subsidiary and (2) the lessee or end-user of the equipment.

UCC Financing Statement
A document, under the UCC, filed with the county (and sometimes the Secretary of State) to provide public notice of a security interest in personal property.

Unguaranteed Residual Value
The portion of residual value for which the lessor is at-risk. The lessor takes on the risk that the equipment may or may not be worth this expected value at the end of the lease term.

Upgrade
An option that allows the lessee to add equipment to an existing piece of leased equipment in order to increase its capacity or improve its efficiency.

Vendor Leasing
Lease financing offered to an equipment end-user in conjunction with the sale of equipment. Vendor leases can be provided by the equipment vendor (manufacturer or dealer) or a third-party leasing company with a close working relationship with the equipment vendor.

Wet Lease
A lease in which the lessor provides bundled services, such as the payment of property taxes, insurance, maintenance costs, fuel or provisions, and may even provide persons to operate the leased equipment. This type of lease is typically referred to in aircraft leasing and marine charters.

Yield
The rate of return to the lessor in a lease investment.