What is LEVERAGED LEASE?

A three-party lease contract for an asset bought by the lessor by borrowing most or all of the monies to purchase the leased asset. Under this contract, (1) the lessor has no risk on the financing the lender gave, (2) the lender holds the leased asset’s title, and (3) the lessee’s payments go to the lender who takes the leased asset on default. Leveraged leases are true tax-oriented leases. The lessor gets the tax benefits as owner from depreciation. The lessee claims as expenses all lease payment.

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