CHAPTER 6

Advantages and Risks of Leveraged Leasing Decisions

What Is the Concept of Leveraged Leasing?

The leveraged lease can be one of the most complex and sophisticated vehicles for financing capital equipment in today’s financial marketplace. The individuals and firms in the leveraged leasing industry are aggressive and creative. As a result, the environment is one of innovation and intense competition.

Is the concept of a leveraged lease complex? Not really. It is simply a lease transaction in which the lessor puts in only a portion, usually 20 to 40 percent, of the funds necessary to buy the equipment and a third-party lender supplies the remainder. Because the benefits available to the lessor are generally based on the entire equipment ...

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