muscleman Posted January 31, 2017 Share Posted January 31, 2017 Sorry for the dumb question. I tried to google it but it is all about how leases work for consumers. Can anyone please let me know how lease work financially for the leasing companies? I know some banks finance auto leases. Let's say I signed a lease and paid $2000 upfront and I will pay $200 per month for 3 years. At lease end the residual value of the car is $20000. Then does the bank pay the entire value of the car upfront for the dealership? If the used car prices decline and 3 years later the car is only worth $15000, who is responsible for that risk and how? Link to comment Share on other sites More sharing options...
Guest Schwab711 Posted January 31, 2017 Share Posted January 31, 2017 https://www.occ.gov/publications/publications-by-type/comptrollers-handbook/pub-ch-lease-financing.pdf Check p.54. This might be what you are looking for. Edit: Probably should use this instead. Anything on "sales-type lease" should work for you. http://www.pwc.com/us/en/cfodirect/assets/pdf/accounting-guides/pwc-lease-accounting-guide.pdf Link to comment Share on other sites More sharing options...
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