capital lease

Definition

A lease that meets one or more of the following criteria, meaning it is classified as a purchase by the lessee: the lease term is greater than 75% of the property's estimated economic life; the lease contains an option to purchase the property for less than fair market value; ownership of the property is transferred to the lessee at the end of the lease term; or the present value of the lease payments exceeds 90% of the fair market value of the property.

Use capital lease in a sentence

It was a capital lease and I knew that because it met certain criteria and my friend told me it was.

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You should always try to get a good capital lease in tact any time you will be renting out your property.

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The capital lease was exactly what the business executive desired as he wanted to make the contractual purchase this week.

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capital investment loan operating lease