What is EQUIPMENT TRUST CERTIFICATE?

Known as an ETC. A type of debt instrument very similar to mortgaging or a leasing. According to the specifications of the agreement, an ETC owner/investor uses a particular asset, paid for over an agreed-to set period of time. At payoff, the investor owns the asset. These certificates originally financed railroad cars. ETCs carry a well-liked tax benefit. Because the investor does not yet own the asset while the ETC is still viable, the asset is not property of the company or investor, so no taxes are owed on it. ETCs are typically used to financing a boat or aircraft (or railcar?).

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