Leasing and finance
term lease
A term lease is a lease that runs for a fixed period. In container leasing it is often called a long-term lease. Triton describes long-term leasing as renting containers at a daily rate for a set term, with fleet costs fixed. At the end, the lease can be extended or the units returned.
Why it matters
A term lease can suit an operator that knows it needs a base fleet for years. The rate is usually lower than a short lease. The trade-off is less freedom. Port Economics notes that long-term leases are tied to extended use. A common mistake is to sign a long term to cover a short spike in demand. The units then sit idle while the daily charge keeps running. Operators should match the term to expected demand and check early termination terms. Term leases are one of several choices, along with master leases, spot leases and purchase.
Read: Buying containers wholesale: A buyer's guide for operators
Definition source: tritoncontainer.com
Related terms
master lease
A master lease is a framework lease between a container owner and a lessee. Triton says its master lease suits companies that scale a fleet up or down with demand and need flexibility to pick up and drop off units. Exact terms differ by lessor, so each contract needs a careful read.
spot lease
A spot lease is a short-term lease priced to current market conditions. Port Economics says short-term leases are also called spot market leases because the price is strongly influenced by supply and demand. The lessee gets equipment for a short, defined period without a long commitment.
operating lease
An operating lease is a lease where the lessor lets the lessee use an asset for a set period, much like a typical rental. W. P. Carey describes it as a more traditional lease arrangement. It is the type of lease that does not meet the tests for a finance lease.
finance lease
A finance lease is a lease that works much like financing the purchase of an asset. W. P. Carey explains that leases are classified as finance when they have characteristics similar to financing a purchase. Under U.S. GAAP the lessee usually records the asset and a liability on its balance sheet.
per diem
Per diem is Latin for "per day." In container leasing, it is the daily rate a lessee pays for each day a leased container is on-hire after any included free days. Lessors use it to price short and flexible leases, and it adds up quickly on idle units.
lease-to-own
Lease-to-own is a plan where a customer pays regular lease payments and may own the item at the end. The FTC says these plans let people take an item home while they pay over time, often under a contract with weekly or monthly payments. Total cost can be much higher than a cash price.
For the industry
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