Leveraged lease

Imagine you want to have a toy car but you don't have enough money to buy it. So, you ask two of your friends to help you. You promise to pay them back the money with interest, but you still can't afford to buy the toy car outright.

So, you come up with an idea! You will lease the toy car from the store, and your friends will help you with the lease payments. You promise to pay them back with interest, but you will also use the car to make money by giving rides to your other friends, charging them a little bit of money in return.

This is called a leveraged lease. It's like renting something, but you use borrowed money to pay for it. In this case, you have two people helping you, which makes it even more leveraged. You can make money with the thing you are renting and use that income to pay back the people who helped you with the lease payments.

In the real world, companies use leveraged leases to finance expensive things like airplanes or heavy machinery. They borrow money from banks or investors to pay for the lease, and then they use the equipment to generate income. This income is used to pay back the lenders, plus interest.

So, a leveraged lease is like renting something with borrowed money, and using the thing you are renting to make money to pay back the loans.