What is a TRAC Lease?
TRAC Lease stands for Terminal Rental Adjustment Clause Lease. These leases are sometimes referred to as open-end leases due to a clause that provides for a last payment adjustment to the lease obligation. At the end of the lease, the lessor is obligated to make up any shortfall, or receive any proceeds in excess of the “Estimated Residual Value” that was mutually agreed upon at the onset of the transaction.*
What is an EFA?
EFA stands for Equipment Finance Agreement. One of the differences between an EFA and a TRAC Lease is that with an EFA the lessor retains the right of ownership of the asset.