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Financial Lease Agreement Template

A financial lease agreement is a contract where a lender provides financing for a client to acquire equipment or property, with the loan secured against the asset itself. It outlines repayment terms, security interests, lien arrangements, and the rights and obligations of each party.

Our financial lease agreement template provides a clear structure for asset-backed financing, ensuring transparency around repayment, security pledges, insurance requirements, and remedies in case of default.

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Financial Lease Agreement

TOR Processing & Trade

Financial Lease Agreement

Contract Number:
Relation Number:
Intermediary:
Code:

THE UNDERSIGNED:

I.

Chamber of Commerce number:
hereinafter called: “Borrower”

II.

Chamber of Commerce number:
hereinafter called: “Lender”

WHEREAS:

Lender shall provide a money loan to Borrower under a financial lease subject to the terms and conditions and provisions indicated below;

Borrower is, or shall be, the owner of the property or properties as described in section 3, if and when this (these) property (properties) shall have been delivered to Borrower and the purchase price has been paid to the supplier, subject to any ownership retention on the part of the supplier;

The provision of the money loan is subject to the condition, among others, that Borrower shall create a lien with the highest ranking of priority on behalf of Lender on the movable property or properties described under 3, hereinafter (jointly) called: "the Object".

DECLARE THAT THEY HAVE AGREED AS FOLLOWS:

Financial Lease Terms

Lender acknowledges to provide a money loan to Borrower, who acknowledges to accept it under a financial lease and, after receiving from Lender, that Borrower is indebted to Lender to the amount of .

Borrower accepts to exclusively divert the money loan to purchase and acquire full and unmortgaged ownership of the Object.

The amount received as a loan, including interest, shall be repaid to Lender in monthly installments of , so that the total sum due to Lender shall amount to .

The first installment shall fall due on . The second and subsequent installments shall subsequently each be paid at monthly intervals.

The amount of the money loan shall be put at Borrower’s disposal by transferring to account of . This transfer together with this financial lease agreement is full evidence of payment by Lender to Borrower.

Borrower authorizes Lender to directly debit the amounts of the monthly installments from account of . Borrower is bound to have sufficient funds in this account.

The money loan in question has been provided to Borrower for the purposes of the exercise of Borrower’s profession or business, and Borrower acknowledges this by signing the present deed.

Security and Pledge

As security for the payment of all amounts due, or that may at any time become due, by Borrower to Lender in respect of this financial lease agreement, as well as security for the payment of any debts due, or that may at any time become due, by Borrower to Lender in respect of any other existing or future lease agreements, financing agreements or on any other account, Borrower also declares, as pledgor, that by signing this deed Borrower is pledging the Object in favour of Lender as pledgee, which pledge is accepted by Lender.

In the event that Borrower has not yet acquired ownership of the Object, the lien in question shall be created subject to the suspensive condition that any ownership retention on the part of the supplier regarding the Object shall lapse, insofar as necessary in advance.

Borrower declares that, with due observance of the provisions under 2.b., Borrower is fully entitled to create a lien on the Object, and furthermore that the Object is not, and after Borrower has acquired ownership of it, shall not be encumbered with any other right of lien or other limited right than the right of lien of Lender referred to in this deed and the right of lien with a lower ranking of priority in favour of referred to under 5.b.

Description of the Object

A , brand: , type: , serial number: , date of construction: , as confirmed in the order confirmation nr. dated from , .

Special Conditions

[Add special conditions here]

Bank Lien and Subordination

By co-signing, , established at , hereinafter called “Bank,” declares to surrender its right of lien with respect to the Object, which surrender is accepted by Borrower, as pledgor.

As security for the obligations to which the earlier lien of the Bank applied, Borrower declares, insofar as necessary in advance, that Borrower shall hereby create a right of lien on the Object on behalf of the Bank with a ranking in priority below that of the right of lien of Lender referred to in this agreement, which pledge is accepted by Bank.

Borrower declares that, with due observance of the provisions under 2.b., Borrower is fully entitled to create a lien on the Object, and furthermore that the Object is not, and after Borrower has acquired ownership of it, shall not be encumbered with any other right of lien or other limited right than the right of lien of Bank referred to in this deed and the right of lien with a higher ranking of priority in favour of Lender referred to under 2.a.

General Terms and Conditions

The attached shall apply to the money loan and the pledge referred to. Borrower acknowledges receipt of these General Terms and Conditions and to have taken note thereof.

Thus drawn up and signed at on

I. Borrower:


[ No signatories assigned ]
Pending

II. Lender:


[ No signatories assigned ]
Pending

III. Bank:


[ No signatories assigned ]
Pending

GENERAL TERMS AND CONDITIONS OF FINANCIAL LEASE

Payments

Early payment of one or more installments shall not release Borrower from the obligation to pay in installments, and the payment shall be deducted from the last installment(s) without giving rise to any entitlement to any reduction or restitution.

Borrower shall neither be entitled to any set-off nor to revoke payment obligations on the grounds of any default caused by circumstances beyond Borrower’s control. The accounts of Lender shall constitute full proof of the amounts owed by Borrower to Lender, subject to evidence to the contrary from Borrower. If payment is made by means of collection by standing order to the debit of a bank account, the provisions and regulations laid down by shall be applicable.

Borrower shall pay Lender interest for late payment in the event of any amount being paid later than the due date, which interest shall be charged at % per month, for the purposes of which a part of a month shall be deemed to be a full month. In the event that Lender permits any postponement of a payment, this shall always be done under reserve of all its rights.

The Object

In the event that Borrower has not yet acquired ownership of the Object, Borrower shall use the monies received under the financial lease in such a way as to acquire ownership of it as soon as possible.

In the event that the Object consists of several elements or parts, insofar as Borrower is the owner of such elements or parts at that time, Lender's right of lien on them shall exist at the time the deed is registered, and insofar as Borrower is not the owner at that time, whenever Borrower acquires ownership of the Object.

The Object shall in all respects be at the expense and risk of Borrower. Lender shall in no way be liable to provide any guarantee or indemnity or to pay compensation with respect to the Object.

Delivery, construction, assembly, and use of the Object, and where applicable its removal by, or on behalf of, Lender, shall be at Borrower’s expense. If Borrower, for whatever reason, is prevented from using the Object, Borrower shall remain obliged to pay the amounts owed to Lender promptly on the due date.

Borrower must, at Borrower’s own expense and risk, maintain the Object in working order and a good state of repair. Borrower shall be entitled to use the Object only in accordance with its intended purpose.

Borrower shall not make any significant alterations to the Object without prior written permission from Lender, which permission shall not be unreasonably withheld.

Borrower must ensure that the Object does not lose its identity through accession, merger or conversion.

Borrower shall be obliged, at Borrower’s own expense, to insure the Object and keep it insured on the broadest possible policy conditions. Borrower must immediately report any damage to, theft of, or loss of the Object to Lender. On demand by Lender, Borrower must provide a copy of the insurance policy as well as evidence that the premiums have been paid.

Borrower shall not be permitted to alienate the Object, to establish a right of lien or any other limited right on the Object in favour of any party other than Lender, or to allow a third party to use the Object – under whatever title – without prior written permission from Lender.

Without prejudice to the provisions of Article 12, in the event that Borrower alienates the Object and purchases a replacement Object, the replacement Object shall, in advance by means of this deed and on the same terms and conditions and provisions as apply to the pledging of the Object, be pledged in favour of Lender.

Borrower shall immediately inform Lender in the event that any third party asserts a claim to the Object, or in the event that the Object is the subject of conservatory attachment or attachment under execution.

Borrower shall be obliged at all times to allow Lender access to the pledged Object.

Repayability

In the event that Borrower is in default of any obligation as debtor or pledgor towards Lender, or in the event that the Object is the subject of conservatory attachment or attachment under execution, or

the Object should be lost, whatever the cause, or should, in the opinion of an expert appointed by the insurer,

be damaged beyond repair, or

it is reasonable to assume that Borrower shall permanently leave within 0 months, or shall move business abroad, or

Borrower applies for an official moratorium or a petition in bankruptcy is filed against Borrower, or Borrower in any way loses free disposal of the whole or part of Borrower’s assets, or

the Object or any other securities provided on behalf of Lender threatens to decrease significantly in value or has actually decreased significantly in value, or

in any other circumstances that in any way seriously interfere with, or endanger, Lender's possibilities of recovery,

then the full amount owed by Borrower to Lender on installments that have become due or that have not yet become due, plus interest, penalties and costs, shall become payable immediately, and Borrower shall be bound to pay the full amount to Lender on demand. Borrower shall furthermore be liable to pay a penalty of % of the total amount of the installments that have become due and have not been paid and the installments not yet due.

Surrender

If Borrower fails to fully meet obligations towards Lender as debtor or pledgor, or gives Lender good grounds for believing that obligations shall not be met, Lender shall be entitled to demand that the Object be transferred into its own possession or that of a third party.

Summary Execution

When Borrower is in default of the obligations for which the Object has been pledged as security, Lender shall be entitled to sell the Object and to recover the amount due to it from the proceeds of the sale.

The right of lien shall also serve as security for interest charged on the debts to Lender for which the right of lien was created as security, even in the event that this relates to interest over a period of more than three years.

Defaults and Waivers

Borrower shall be in default towards Lender in the event that, and insofar as, Borrower is in default of any obligations, for whatever reason, including default outside Borrower’s control, without any requirement of proof of default and regardless of whether it is possible to fulfil the obligations or not.

Lender shall not be obliged to provide any notice or communication as referred to in .

Co-signatory, Obligations, Subordination and Pledging

In the event that one or more individuals or legal entities have committed themselves towards Lender as Co-signatories, the following provisions shall furthermore apply to them:

The Co-signatory shall surrender all rights, privileges and defences accorded by law to joint and several co-debtors and shall on demand by Lender pay all claims of Lender by virtue of or connected with the Agreement against the Borrower.

The Co-signatory shall hereby subordinate any present or future claims by reason of recourse and/or subrogation against all other jointly and severally liable co-debtors to all present and/or future claims of Lender against the said other jointly and severally liable co-debtors in the sense that the jointly and severally liable Co-signatory shall not enforce a claim on the grounds of recourse and/or subrogation so long as Lender has not been paid in full.

The Co-signatory hereby pledges to Lender, which accepts the pledge, or undertakes to pledge or authorizes Lender to pledge to itself the previously mentioned subordinated claims as extra security for the payment of all claims that Lender has or may come to have against the Co-signatory.

In the event that the aforesaid pledge is no longer in effect, the Co-signatory hereby surrenders any present and/or future claims on the grounds of recourse and/or subrogation against the other jointly and severally liable co-debtors.

Final Provisions

Borrower shall be obliged to inform Lender of any change of address within 0 months.

Borrower shall be liable for all costs incurred by Lender in the execution and enforcement of its rights, such as judicial and extrajudicial costs of recovery.

This agreement shall be subject to the provisions of . Any disputes shall be submitted to the court with jurisdiction in , on the understanding that Lender shall be entitled to submit the dispute to the court that would have jurisdiction in the absence of the previous stipulation.

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Disclaimer: The original creator, the author of this template, and fynk GmbH are not responsible for any damages or liabilities that may result from using this template. This template should not be considered a substitute for legal advice, and consulting with a legal professional is recommended before use. fynk GmbH, the original creator, and the author do not provide legal advice and will not be held accountable for any legal consequences arising from its use.

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Background Information

Learn how to use a financial lease agreement

Understand when to use a financial lease, what provisions to include, and how this structure protects both lender and borrower in equipment or property financing.

This financial lease agreement clearly sets out ownership, security, and repayment protections in one structured contract. It ensures that the borrower uses the loan exclusively to acquire the specified asset, while the lender’s interests are safeguarded through a first-ranking pledge on that asset. The agreement also covers maintenance, insurance, surrender, and summary execution, making it a comprehensive framework for high-value equipment or property financing where both parties need legal certainty and strong collateral protection.

What is a financial lease agreement?

A financial lease agreement is a contract where a lender (often called the lessor) provides financing so a business can purchase equipment or assets. In return, the business (the lessee) agrees to repay the cost in fixed installments over an agreed period.

Unlike a rental, a financial lease usually ends with the business becoming the full owner of the equipment. That means you are not just paying for the right to use the asset, but essentially financing its purchase with the lease acting as the repayment structure.

Think of it as a middle ground between buying equipment outright and taking out a traditional loan. You get immediate access to the equipment, spread the cost over time, and keep your cash flow steady.

Finance lease vs installment sale agreement

It is easy to confuse a finance lease with an installment sale, since both involve structured payments over time. The main difference comes down to ownership and legal treatment.

  • Finance lease: The lessor remains the legal owner during the lease term. The lessee has the right to use the equipment and is responsible for risks like maintenance and insurance. At the end, ownership may transfer once all payments are completed.
  • Installment sale: The buyer becomes the legal owner from day one, but the seller finances the purchase price. The buyer pays in installments until the debt is cleared.

So which is better? A finance lease is often the smarter option if you want predictable payments and tax-deductible lease expenses, while an installment sale may make sense if immediate ownership is critical for your operations.

Equipment finance agreement vs lease

Another common question is whether an equipment finance agreement is the same as a lease. The short answer: not always.

  • In a finance lease, the equipment technically belongs to the lessor during the term, even though the lessee uses it as if it were their own.
  • In an equipment finance agreement, the structure can look more like a secured loan, where the borrower is treated as the owner but the lender holds a security interest on the equipment until repayment is complete.

From an accounting and tax perspective, both can achieve similar results, but the legal wording matters. For businesses, the main question is practical: do you want your financing structured as a lease (with ownership at the end), or as a loan secured against the equipment?

Key clauses in a financial lease agreement

Every finance lease agreement comes with a set of clauses that make the deal clear and enforceable. Here are the most important ones you should expect:

Repayment terms and interest

The agreement spells out the loan amount, the total repayment sum, and the installment schedule. Payments are usually fixed monthly amounts, which makes budgeting easier. Interest is included in the repayment plan, so you always know exactly what you owe. If deadlines are missed, a late payment penalty or default interest rate may apply.

Liens and pledges

Since the lender is financing the purchase, they protect themselves by holding a first-priority lien on the equipment. This means if you default, the lender has the legal right to take back or sell the equipment to cover the debt. Sometimes a bank may also hold a subordinated lien. See also lien waiver.

Insurance and maintenance obligations

In most financial leases, the lessee takes full responsibility for keeping the equipment insured, maintained, and in good working order. The lender will typically require proof of insurance, making sure their investment is protected.

Default and repossession provisions

If payments are missed or if the business goes bankrupt, the agreement allows the lender to accelerate the debt and demand full repayment. They can also repossess and sell the equipment. Strong default and termination clauses make sure the lender is covered if things go wrong.

Financial lease agreement sample: what it looks like in practice

A financial lease agreement sample usually includes all the details of the leased equipment, repayment amounts, and security rights. For example, a contract might state that the lessee is financing a specific centrifuge machine, identified by its make, model, and serial number.

It will then outline:

  • The loan amount provided by the lessor
  • The repayment schedule, often over several years
  • The total amount due (loan plus interest)
  • The lien or pledge over the equipment as security
  • The lessee’s duties to maintain, insure, and use the equipment properly

By seeing an actual sample, you get a clear picture of how structured and detailed these agreements are. They leave little room for misunderstanding, which is exactly the point.

Why businesses use financial lease agreements

So why choose a financial lease agreement instead of a bank loan or cash purchase? For most companies, it comes down to three main reasons:

  1. Cash flow management: You avoid a huge upfront expense by spreading the cost over time.
  2. Access to high-value equipment: Expensive machinery becomes affordable without eating into working capital.
  3. Shared risk and security: The lender takes security in the equipment, so you do not need to pledge unrelated business assets.

For lenders, financial leases are attractive because they are backed by tangible collateral. For businesses, they are a practical way to grow without draining capital.

Customizing your financial lease agreement template

No two businesses are exactly alike, and your lease agreement should reflect that. A financial lease agreement template gives you a solid foundation, but you will likely need to adjust a few things:

  • Repayment schedules: Some companies prefer monthly installments, while others work better with quarterly or seasonal payments.
  • Industry-specific needs: Manufacturing companies may need stricter maintenance obligations, while logistics companies might focus on insurance coverage for vehicles.
  • Co-signatory or guarantor terms: In some cases, banks or additional guarantors may be involved, and the agreement should clearly set out their role and obligations.

The key is tailoring the template so it matches your financing deal and your industry’s reality.

Keep your financial lease agreements under control with fynk

Writing the contract is just the start. The real work comes after, when you have to track payment schedules, interest, insurance obligations, and renewal dates. That is where fynk helps you stay in control:

  • Salesforce integration generates contracts straight from sales opportunities with the right details filled in automatically.

  • Headers and footers make sure every agreement looks professional and includes the right branding and disclaimers.

  • External collaboration lets you negotiate with partners or banks in one secure place, instead of losing track in long email threads.

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With fynk, your lease agreements are not just signed and filed away, they are easy to oversee, update, and enforce whenever needed.

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FAQs

Who owns the equipment under a finance lease?
During the lease term, the lender (lessor) is the legal owner. The lessee gets full use of the equipment and usually becomes the owner after the final payment.
Can lease payments be written off as rent?
Yes, in many cases lease payments are treated as business expenses and can be deducted for tax purposes. Always check local tax rules for specifics.
What happens if the lessee defaults?
If payments are missed, the lender can demand full repayment, repossess the equipment, and recover the outstanding debt from its sale.
How long does a finance lease typically last?
Lease terms often range from three to seven years, depending on the type of equipment and the financing deal.
Can a financial lease be refinanced?
Yes. Businesses can sometimes renegotiate or refinance a lease if their circumstances change, but it depends on the lender’s policies and the terms of the contract.

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Clause Library: learn more about the clauses in this template

Learn more about the clauses appearing in this template and find other clauses that are used in real contracts.

Payment terms and conditions

Payment terms and conditions outline the specifics of how and when a party will be compensated for goods or services provided. They typically include details on the payment method, due dates, any interest or penalties for late payments, and any discounts available for early payments.

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Late payment penalty

A Late Payment Penalty clause stipulates that if a payment is not made by its due date, the party responsible for the payment will incur an additional fee or penalty. This clause incentivizes timely payments and compensates the payee for any inconvenience or financial impact caused by the delay.

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Default interest rate

A default interest rate clause stipulates the interest rate that will be applied to overdue payments in a contract. This rate serves as a financial penalty, incentivizing timely payments and compensating the party owed for any delay.

9 example clauses

Assignment of security interest

The "Assignment of Security Interest" clause outlines the conditions under which a party to a contract can transfer their security interest in a collateral to another party, allowing the transferee to assume the rights and obligations associated with that interest. This clause ensures that any assignment is conducted in accordance with the agreement's terms and applicable laws, protecting the interests of all parties involved.

7 example clauses

Lien waiver

A lien waiver is a legal document that, once signed, relinquishes a party's right to file a lien against a property for unpaid work or materials. It serves to protect property owners from potential claims and disputes related to construction or renovation projects.

4 example clauses

Cross default

A cross default clause is a provision in a loan or credit agreement that triggers a default if the borrower defaults on another obligation, such as a different loan or financial agreement. This clause aims to protect lenders by ensuring they can take action if the borrower is experiencing broader financial difficulties.

16 example clauses

Termination with cause

"Termination with cause" refers to a contract provision that allows one party to end the agreement if the other party engages in specific misconduct or breaches the contract's terms. This clause typically outlines what constitutes "cause," such as failure to meet obligations, illegal activity, or unethical behavior.

12 example clauses

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