Finance and Capital Leases
A Capital or Finance Lease is known by many names and is characterized by a bargain or minimal purchase option at lease end. Most capital leases are used as a loan equivalent with a third party in order to preserve working capital lines with existing bank resources or to preserve cash reserves.
Standard terms range from 12 to 60 months, with longer terms available to meet specific circumstances. In most finance leases, the lease contract calls for a minimum of one payment in advance (except for tax exempt borrowers).
Finance leases are arguably the most prevalent form of lease in use today.
