Glossary
What is Fair Market Value Lease?
A fair market value lease, sometimes called a true or operating lease, gives you use of equipment for a set term with the option at the end to return it, renew the lease, or buy it at its then-current market value. Because you are not paying off the full cost, monthly payments are generally lower than with a $1 buyout lease. This structure often suits equipment that becomes outdated quickly. Lease payments are generally deductible as a business expense; confirm with a tax professional.
Example
A design firm leases computers on a fair market value lease and returns them for newer models after three years.
Related funding
Equipment Financing: The equipment itself secures the financing.
Related terms
Questions about an offer? Your advisor will explain every term.