LeaseForce International - Commercial Equipment Leasing, Financing & Consulting Service Provider

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Effective Lease Rate

The effective lease rate (for the lessee) of the cash flows resulting from a lease transaction. To compare this rate with a loan interest rate, a company must include in the cash flows any effect the transactions have on federal tax liabilities

Encumbrance

A mortgage, lien, claim or any other impairment of the clear title to real estate or personal property.

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 options include purchasing the equipment, renewing the lease or returning the equipment to the lessor. Options are sometimes given as an amendment to the lease documents and are not made part of the actual lease document.

Estimated Residual Value

For purposes of calculating the maximum allowable term of a "tax-oriented or operating lease", this is the "fair market value" of the lease equipment at the end of the lease term, calculated in constant dollars excluding inflation or deflation

Estimated Useful Life

The estimated time period leased equipment is expected to be useful. Estimated useful life is used to calculate the maximum allowable term of a "tax-oriented or operating lease".

Exemption Certificate

A document exempting a lessor from paying sales tax on the equipment being leased. A lessor may be buying the equipment for "re-sale" as would a vendor/supplier, while a lessee may be tax exempt for other reasons ( i.e. non-profit entity, government entity or a bank).