Glossary of Terms

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Operating Lease

A business concept (not the accounting concept under FAS 13) in which the lease lasts for short-term of use of equipment by the lessee. The finance company retains ownership of the equipment and expects the lessee to return the equipment at the end of a term of three to 10 years. The lessor realizes its return through higher rents and residual value, which usually requires and results from sales or re-leasing of the returned equipment. Additional services, such as maintenance and insurance, may be provided by the lessor. (Courtesy www.elfaonline.org)

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