Types of Leases
Peggy Argo
National Sales
|
There is often confusion over whether the lease
is being considered from an accounting, tax or legal perspective.
An accountant, the IRS, and a tax attorney may use different terms
for the same transaction. To keep terminology clear, it helps
to consider from which perspective the participants are coming.
Below are standard definitions:
Fair Market Value Purchase Option (FMV) -
Delivers the lowest monthly payment of a standard lease with flexible
purchase options at lease end. A Fair Market Value lease is the
preferred option for those concerned about equipment obsolescence.
The customer can:
-
Return the equipment
-
Purchase equipment for the Fair Market Value
-
Continue to lease the equipment under lease
renewal
10% Purchase Option - With the 10% purchase
option lease, your customer's payment will be lower than a One-Dollar
Buyout Lease, but may be higher than the Fair Market Value option.
At the end of the term, the customer may choose one of the following
options:
One Dollar Purchase Option - Choose this
purchase option if your customer wants to own the systems at lease
end. The monthly payment is higher than the FMV, but the advantage
of this type of lease is that your customer will own the equipment
at the end of the lease term for $1.
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