Leveraged Lease

AAA

DEFINITION of 'Leveraged Lease'

A lease agreement that is partially financed by the lessor through a third-party financial institution. In a leveraged lease, the lending company holds the title to the leased asset, while the lessor creates the agreement with the lessee and collects the payment. The payments are then passed on to the lender.

INVESTOPEDIA EXPLAINS 'Leveraged Lease'

In a leveraged lease, if the lessee stops making payments to the lessor, then the lessor stops making payments to the financial institution (lender). This allows the lender to repossess the property. The lessor may also have the right to retain the property upon lessee default, as long as the lessor continues making payments to the lender.

RELATED TERMS
  1. Gap Amount

    Insurance will only cover a certain amount of coverage if leased ...
  2. Fixed Price Purchase Option

    The right, but not the obligation, to buy a leased item at a ...
  3. True Lease

    A specific type of multi-year lease which does not pass on ownership ...
  4. Debtor

    A company or individual who owes money. If the debt is in the ...
  5. Default

    1. The failure to promptly pay interest or principal when due. ...
  6. Lease

    A legal document outlining the terms under which one party agrees ...
Related Articles
  1. Which leverage ratios are most useful ...
    Fundamental Analysis

    Which leverage ratios are most useful ...

  2. How do I unlever beta?
    Fundamental Analysis

    How do I unlever beta?

  3. What are the differences  between gross ...
    Fundamental Analysis

    What are the differences between gross ...

  4. Can real estate agents give referral ...
    Home & Auto

    Can real estate agents give referral ...

Hot Definitions
  1. Debit Spread

    Two options with different market prices that an investor trades on the same underlying security. The higher priced option ...
  2. Leading Indicator

    A measurable economic factor that changes before the economy starts to follow a particular pattern or trend. Leading indicators ...
  3. Wage-Price Spiral

    A macroeconomic theory to explain the cause-and-effect relationship between rising wages and rising prices, or inflation. ...
  4. Accelerated Depreciation

    Any method of depreciation used for accounting or income tax purposes that allows greater deductions in the earlier years ...
  5. Call Risk

    The risk, faced by a holder of a callable bond, that a bond issuer will take advantage of the callable bond feature and redeem ...
  6. Parity Price

    When the price of an asset is directly linked to another price. Examples of parity price are: 1. Convertibles - the price ...
Trading Center