LEASE TERMINOLOGY

Making Sense of Lease Terminology…

LESSEE: That's you, the user of the equipment.

LESSOR: That's us, Hathaway Capital, or one of our partners, who owns the equipment and collects the monthly payments.

MANUFACTURER: The company that actually makes the equipment you are leasing.

VENDOR: This is the company who is selling you the equipment. It's usually your local distributor or dealer.

LEASE TERM: The period of time that the lease is written to cover.

MONTHLY RENTAL: The amount of the monthly payment made to the lessor.

ADVANCE RENTALS: Up-front money that you pay to commence the lease.

SECURITY DEPOSIT: Money that you pay to secure payment, which is held by lessor. It is not unusual that a portion of the advance rental is applied as a Security Deposit. For example: two payments, applied as the first monthly payment and a Security Deposit that will be applied as the last payment.

PURCHASE OPTION: This is the amount that you would pay at the end of the lease if you wanted to buy the equipment from lessor.

ADDITIONAL COLLATERAL: These are assets that can be pledged by you to the lessor, ensuring your performance under the lease. This could be cash, stocks, marketable securities, other equipment, vehicles, real estate, or other items.

PAYMENTS: The monthly amount you pay for the use of equipment.

GUARANTEES: Assurances signed by the principals (owners) of the company, outside companies, or other individuals. Promises that the lease payments will be made.

LEASE OR BUY: The decision process that you as a lessee go through to decide which method of acquiring equipment is most beneficial to your business.

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Mukilteo, WA 98275

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