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Lease Glossary

Glossary of Lease Terms

  • Lease – A contract conveying use of an asset for a specified period at a specified rate.
  • FMV Purchase Option – an option to purchase the asset at the Fair Market Value at the end of the lease term.
  • Base Term – the original term of the lease.
  • Commencement – date the lease starts.
  • Residual Value – expected market value at the end of the lease.
  • Lease Factor – lease payment divided by sales price.
  • Lessee – the user of the leased equipment.
  • Lessor – the owner of the equipment being leased.
  • Net-Lease – Lessee is responsible for maintenance, taxes and etc.
  • Residual – today’s estimate of what the equipment will be worth after the term of the lease.
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