True Lease
A true lease offers the Lessee lower lease payments when the Lessor
retains the depreciation benefits and other tax incentives related
to the equipment. The purchase option at maturity in a True Lease is
usually the Fair Market Value of the equipment.
Operating Lease
A lease which qualifies for accounting purposes under FASB 13 as an
operating lease, based on the following primary four criteria: (1)
The lease term does not exceed 75% of the useful life of the
equipment, (2) Title to the equipment does not automatically pass to
the lessee at the end of the lease term, (3) The lease is not have a
bargain purchase option, and (4) The present value of the minimum
rentals must be less than 90% of the equipment cost. An operating
lease adds no balance sheet asset or liability and the rental
payments are treated as an operating expense. A True Lease is not
necessarily an Operating Lease.
Capital Lease
A lease which is not classified for accounting purposes as an
operating lease is classified as a capital lease. With a capital
lease, the leased asset and related lease liability are shown on the
balance sheet.
$1 Purchase Option
This type of lease enables the business to own the leased equipment
at the end of the lease for a nominal amount ($1).
10% Purchase
Option
This type of lease also enables the business to own the leased
equipment at the end of the lease term and offers a lower monthly
payment than the $1 Purchase Option does.
TRAC Lease
A terminal Rental Adjustment Clause ("TRAC") is a type of True Lease
limited to titled motor vehicles used in a commercial business. A
value of the collateral is stated in the lease which eliminates the
Lessee's exposure to a FMV purchase price at the end of the lease.
After the equipment is sold, the Lessee receives any value above the
TRAC but is required to make up any shortfall in that value to the
Lessor.
Tax Exempt Leases
For 501(c) non-profit organizations including churches, hospitals
and fraternal organizations. A Tax Exempt Lease allows the
non-profit organization to match payments to budget constraints,
contributions or useful life of the equipment. Financing is 100% of
the equipment cost.
Healthcare Financing
Programs
YOOJ
Solutions has extensive experience in the healthcare industry
supporting the needs and goals of physicians, hospitals and other
health care organizations. More...
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