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lease contract

Understand the Difference Between a Market Value Lease vs. $1 Buyout Lease

No matter which industry you operate in, your business likely needs equipment to perform daily tasks. Businesses are constantly looking for the best equipment to increase productivity and efficiency, but this can cost a pretty penny. However, leasing allows you to upgrade your equipment while saving money.

Below, you’ll learn about the two different types of leases you’ll want to explore when making purchasing decisions.

1. Fair Market Value Lease

A Fair Market Value Lease (FMV) is the most common type of lease and is frequently used when leasing cars and other large purchases. FMV leases allow the lessee or buyer to use the asset for a fixed period of time, usually 12-60 months, while making set monthly payments. At the end of the lease period, the lessee can decide to purchase the equipment at the amount of its FMV at that time, return the equipment, or upgrade the asset.


2. $1 Buyout Lease

A $1 Buyout Lease is similar to a FMV lease, but the lessee pays a higher monthly payment. At the end of the lease term, the lessee has the option to purchase the equipment for $1. Businesses often use this type of lease when they intend to keep the equipment for an extended period set at the time of the lease issue.

NOTE: To qualify for a lease, you must be in good credit standing.