Glossary of Terms

In this section, LCA defines some of the basic terms used in the leasing industry. For more in-depth information on leasing, please consult LCA’s Resources page.

  • Lease – A lease is a contract between a Lessee (customer), Vendor/Dealer (equipment provider) and Lessor (financing source) to use the Vendor / Dealer’s asset for a specific period of time at a predetermined rate.
  • Lessee – The Lessee is the commercial or municipal business looking to acquire equipment through leasing a monthly payment instead of a large upfront cash outlay. The Lessee must have an authorized signer (President, CEO, Mayor, etc.) sign the Lease Application to start credit review and the Lease Agreement to initiate the lease.
  • Vendor/Dealer - The Vendor/Dealer is the manufacturer or seller of the equipment who utilizes LCA’s financing program to offer leasing to his/her customers.
  • Lessor – The Lessor agrees to purchase the equipment from the Vendor/Dealer and arranges the financing for the Lessee. The Lessor (LCA) owns the equipment – the Lessee (customer) makes monthly payments to the Lessor (LCA) for the equipment’s use.
  • Lease Application – This simple one page document qualifies a business to receive financing from LCA. The Lessee must fully complete this document and sign the bottom to allow LCA to perform a credit review of the commercial/municipal entity.
  • Purchase Option – The Lessee will select their preferred end of lease Purchase Option based on budget and need. Standard and specialized options are clearly defined in the Purchase Option section.
  • Term – Number of months the Lessee will lease the equipment from the Lessor. Traditional terms consist of 12, 24, 36, 48 or 60 months.
  • Lease Agreement – This document serves as the binding contract between the Lessee and Lessor to purchase the equipment. The Lessee agrees to all terms and conditions of the Lease and an authorized signer must sign on all indicated areas on page 1 of the document to start the Lease.
  • Advance Payments – LCA requires first and last payments on their standard purchase options. These advanced payments are taken off the term of the lease. For example, a 36 month lease would have 34 monthly payments (36 total payments – 2 advance payments = 34 monthly payments).
  • Security Deposits – Security Deposits are not typically required by LCA. A Security Deposit could range from 1 to 6 payments in collateral. These deposits are returned at lease end once the Lessee has fulfilled all lease obligations. If any payments are missed, the fees are deducted from the security deposit(s).
  • Lease End – At lease end, the Lessee can choose to buy the equipment for the stated purchase option ($1.00 Buy-Out, Fair Market Value or 10% of Purchase), upgrade lease with new equipment or return the equipment to the Lessor.

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