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Certified Lease & Finance Professional (CLFP) Class Practice Exam

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Security Deposit is defined as?
Correct Answer:
Cash Deposit For Performance
Explanation:
A security deposit is a cash amount put down by the lessee at the start of the lease to guarantee that lease obligations will be met, such as timely rent and the equipment being returned in acceptable condition. It acts as a financial cushion for the lessor and is typically refundable at the end of the lease, after any deductions for damages or amounts owed. This makes it a performance guarantee rather than a fee, an up-front loan, or a line of credit.

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