Asset-Backed Securities. An investment security that is collateralized by a pool of assets, such as loans, leases, credit card debt, royalties, or receivables
The rate at which interest is calculated.
Payments made by the lessee at the inception of a loan or leasing transactionand/or thereafter to reduce the overall balance.
A contract sold by an insurance company designed to provide payments to the holder at specified intervals, usually after retirement. Fixed annuities guarantee a certain payment amount, while variable annuities do not, but do have the potential for greater returns.
Annual Percentage Rate. The effective rate of interest, taking into account compounding and other fees,for a specified period (usually one year).
Any item owned by an individual or company that may be subject to a loan or lease and serve as collateral.
An organization skilled in the servicing of financial transactions who agrees to assume the servicing obligations from an existing servicer in the event of a failure on behalf of the existing servicer or the portfolio owner.
Consumer Financial Protection Bureau. The U.S. agency responsible for consumer protection in the financial sector.
Something pledged as security for repayment of a loan that is to be forfeited in the event of a default.
A person or organization serving in a custodial capacity on behalf of a special purpose entity (SPE), interest holder or indenture trustee.
A reduction in the value of an asset with the passage of time, often due to wear and tear.
A fee charged for preparing, distributing and storing transaction documents in any financialtransaction.
Economic Life (Useful Life)
The period of time during which an asset will have economic value and be usable.
Fair Market Purchase Option
An option to purchase leased property at the end of the lease term at its then fair market value.
The Financial Accounting Standards Board, which sets accounting rules in the United States, subject to certain oversight by federal governmental agencies.
Fair Debt Collection Practices Act. U.S federal law that governs debt collection practices.
In a business sense, this is typically a full-payout, non-cancellable agreement in which the customer is responsible for maintenance, taxes and insurance. However, the term “finance lease” also refers in Article 2A of the Uniform Commercial Code (UCC) to a special type of “lease” in which the lessor, lessee and the manufacturer have contractual relationships and the lessor, at all times with the lessees acknowledgement, remains a passive investor where the lessee makes most equipment decisions directly with the manufacturer.
A tangible asset, such as furniture, fixtures or equipment held for business use.
An agreement by one party to accept responsibility for a financial obligation of another person. The guarantor’s obligation is generally triggered when the primary person or entity does not satisfy the guaranteed obligation.
One who guarantees a debt or obligation of another person or entity.
Health Insurance Portability and Accountability Act. A U.S. law that sets privacy standards to protect patients’ medical records and other health-related information.
The agreed,stated or other appropriate value of equipment or other capital assets after all exclusions, such as maintenance or service charges, that an insurance company will provide casualty or property insurance to cover losses or damage to the equipment or other capital asset.
A contract that includes an option for the lessee either to renew the lease at fair market rental value or to purchase the asset for its fair market value at the end of the lease term.
The party to a true lease agreement who has legal, beneficial or tax title to the equipment and grants the lessee the right to use and possess the equipment for the lease term.
Line of Credit
An arranged amount of credit that a lender may advance a borrower under various types of credit agreements. Such advances may be based on several factors, such as inventory, accounts receivable and equipment as collateral, and creditworthiness of the borrower.
A business conceptin which the lease lasts for the short-term use of equipment by the lessee. The finance company retains ownership of the equipment and expects the lessee to return it at the end of a term of three to 10 years.
In the context of a structured settlement, this is an individual who is receiving tax-free payments under a structured settlement and proposes to make a transfer of payment rights thereunder.
Payment in Advance
Payment made before the actual obligation arises for which payment is due.
Payment in Arrears
Payment made after the obligation has been satisfied.
Payment Card Industry – Compliant. Adherance to the guidelines set forth by the PCI Standards Council for the purpose of managing the security of credit cards.
In the context of a structured settlement, this includes both recurring payments and scheduled future lump sum payments.
Servicer responsible for payment collection, cash management and reporting of a loan or lease.
A provision by which a lessee has the right to purchase the equipment at the end of the lease. The purchase option may be stated at a specified amount or at fair market value.
Qualified Assignment Agreement
In the context of structured settlements, this is a document providing for a Qualified Assignment. An assignment is considered “qualified” if the settlement proceeds are excluded from income taxes underthe meaning of section 130 of the United States Internal Revenue Code, United States Code Title 26, as amended from time to time.
To pay off an existing loan with a new one while using the same property as collateral.
The process of selling or leasing usedcapital assets by equipment management personnel on behalf of the lessor, loan holder or independent party.
The value of an asset at the conclusion of a lease.
States impose sales taxes on retail sale transactions for tangible personal property that is used, consumed or stored in the state.
The financial practice of pooling various types of contractual debt, such as auto loans, equipment leases or credit card debt obligations, and selling said debt as bonds or pass-through securities to various investors. The principal and interest on the debt underlying the security is paid back to the various investors regularly. Securitiesbacked by other types of receivables are asset-backed securities (ABS).
Loans usually structured to last one year or less and are often paid at the end of the term in a lump sum.
Statement on Standards for Attestation Engagements. A set of rules for conducting an attestation of a financial service organization’s internal controls and issuing a System and Organization Controls’ report. One of the highest credibility certifications a financial service organization can obtain.
An arrangement for periodic payment of damages for personal injuries or sickness established by settlement or judgment in resolution of a tort claim. Alsofor periodic payments in settlement of a workers’ compensation claim.
Participation of financial institutions in a sale and/or assignment of all or part of an underlying lease or loan transaction. For example, the lease rentals from a transaction originated by a lessor may be assigned to another financier as collateral for a loan to the assigning lessor or as an outright sale of lease rental stream.
Also called a True Lease. This is any lease in which the lessoris considered the owner of the leased equipment for federal income tax purposes as classified by Revenue Procedure 2001-28 (Rev. Proc. 2001-28).
Telephone Consumer Protection Act. A federal statute to safeguard consumer privacy that restricts telemarketing.
Financing generally used for working capital, expansion, refinancing and acquisitions. It is repaid monthly or at another agreed interval for a specified term.
A bank or trust company that holds title to or a security interest in leased property for the benefit of the lessee, lessor, and/or creditors of the lessor, as appropriate.
Uniform Commercial Code (UCC)
A statute thatprescribes very similar rules in almost every state in the U.S. for secured transactions, leasing and other commercial and financial transactions. The UCC is intended to represent the best practices in commercial transactions and, in certain parts, consumer transactions.
A loan that is not secured by assets but is based solely on the creditworthiness of the customer.
Many states charge a “use” tax in lieu of a sales tax when equipment is leased. In practice, instead of paying a sales tax for purchase of the leased equipment, the lessor collects or lessee directly pays use taxes with respect to each rent period as a percentage of the rentals over the lease term.
The period of time during which an asset will have economic value and be usable. The useful life of an asset is also called its economic life.
An entity that sells goods and may provide services to customers.