Glossary
What is $1 Buyout Lease?
A $1 buyout lease is an equipment lease that lets you purchase the equipment for one dollar at the end of the term. Because the payments cover essentially the full cost of the equipment plus the financing charge, monthly payments are usually higher than with a fair market value lease. Economically, it works much like an equipment loan, and it is often treated as a purchase for tax purposes. It suits businesses that know they want to keep the equipment long term.
Example
A landscaping company leases a mower on a $1 buyout lease, makes 36 payments, and then owns the mower for a dollar.
Related funding
Equipment Financing: The equipment itself secures the financing.
Related terms
Questions about an offer? Your advisor will explain every term.