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What is a lease proposal?

Instead of a lease application, a request for proposal (RFP) outlining the need of prospective lessees for the financing of mid- and big-ticket assets is prepared and sent to prosp…


What is a lease master trust?

A master trust is an investment structure that allows for the holding and management of a portfolio of assets and a dynamic collateral profile allowing for the addition of new coll…


What is a lease funder?

A lease funder is any party other than the lessor that provides funding to the lease originator either as a lease purchaser purchasing legal title and the risks, rewards and contro…


What is a lease commitment letter?

A document prepared by a prospective lessor and presented to a prospective lessee that sets forth the lessor’s commitment to provide the proposed lease is a commitment letter.  A c…


What is a lease broker? What is a packager?

A lease broker is an individual or firm that arranges lease transactions, commonly involving commercial and industrial equipment, as agent between lessees and lessors – without par…


What is a lease assignment agreement?

An assignment is the transfer of some or all of the rights in a contractual arrangement and/or an asset to another party, where the obligors under the arrangement are bound to perf…


What is a lease application?

The form provided by a prospective lessor that, often combined with a credit application, is filled out and returned by the prospective lessee to provide the lessor with basic info…


What is a guarantee?

A guarantee is personal security in the form of an agreement provided by a third party, typically a parent company, to a creditor to assume a debtor’s obligation in the event the d…


What is a debt participant?

A third-party institutional investor (insurance company, pension fund) unaffiliated with the lessor or lessee that lends the long-term debt funding in a leveraged lease on a nonrec…


What is a credit rating agency?

Where a credit bureau focus on consumer credit, a credit rating agency (CRA) is an independent company that evaluates and quantifies the credit risk of banks, nonbank corporations…


What is a credit model?

A credit model is an analytical method that models the credit default process based on available information used to determine the probability of default on a credit arrangement (l…


What is a credit loss model?

A credit model used to determine credit losses that have or will probably arise from a credit portfolio in order to calculate the allowance for loan and lease losses (ALLL) and to…


What is a credit bureau?

A credit bureau is an independent agency that researches, collects, analyses and organizes credit information primarily on consumers and small businesses (SMEs) and maintains and s…


What is a credit application?

A credit application is a form submitted to a prospective lender or lessor that provides credit information on a prospective borrower or lessee, respectively – and occasionally a g…


What is a commercial real estate lease?

A commercial real estate lease is a lease contract between the owner (landlord) and occupant (tenant) of commercial real estate in which the landlord grants to the tenant the right…


What is a collateral assignment?

Collateral assignment is the transfer of the rights to the rental payments from and a security interest (lien) in a leased asset by the asset’s owner and lessor to lenders – the le…


What is a certificate of acceptance?

As soon as delivery of the asset is made to the lessee, the lessee must acknowledge acceptance of the asset and authorize the lessor to pay the asset’s supplier.  Delivery and acce…


What is a captive lessor?

A captive lessor is a division, subsidiary or joint venture established with a leasing company by a manufacturer or dealer with the primary purpose of providing the lease financing…


What is a cancellable lease?

A cancellable lease is generally an operating lease (rental) that may be terminated by either the lessee or the lessor without penalty. A finance lease is a noncancellable lease in…


What is a bargain purchase option? What is a bargain renewal option?

A bargain purchase option (BPO) is the contractual right of a lessee to purchase the leased asset at a fixed price that is substantially below its expected fair value when the opti…


What is a bank lessor?

A bank lessor is a bank or bank affiliate that offers leasing as part of its product mix through its regular lending units, a special leasing unit within the bank, a separate leasi…


What are the lessor’s costs in leasing?

A costs that results directly from and is essential to the origination or acquisition of a transaction and that the entity would not have incurred had that transaction not occurred…


What are the fees in leasing?

A fee is payment for a service as compensation for costs, typically expressed in basis points (bp), with 1 bp equal to one hundredth of one percent (0.01%).  Income that is generat…


What are the common lease purchase options?

A fixed-purchase option (FPO) is the lessee’s contractual right to buy the asset at the end of the original lease term for a fixed percentage of its original cost.  The lessee’s op…


What are the advantages of ABSs for lessors?

Securitization provides several benefits to lessors, including: Transformation of illiquid nonnegotiable assets into marketable instruments; Removal of highly illiquid assets from…


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