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FMV (Fair Market Value) Lease – An FMV lease typically offers a much lower monthly payment and special tax incentives. The equipments fair market value at lease end is what determines the payment and cost at lease end. These leases are usually shorter term from 24-36 months and have buyouts @ 30% to 40% of the original cost. The buyout is usually structured as an option to return equipment to the finance company or purchase.

FMV structures are the best when wanting to stay on top of rapidly changing technology, as in the Electronics industry.

Advantages include:

Simplified paperwork compared to your bank.

Tax benefits: These types of leases allow for 100% write off of the monthly payment. Always check with your accountant to verify how these tax benefits will affect your company.

Helps to keep your production technology up to date curtailing obsolescence, or heavy use.

Leaves your bank line of credit available for other uses.

Low down payments: Preserves your working capital because leasing requires no down payment and provides 100 percent financing, including ancillary costs, such as shipping and installation. Operating capital is saved for revenue-generating investments.

Terms with fixed rates: Bank loans typically use floating rates and these can be called in anytime during the loan. Leases offer fixed payments through the entire term and are not callable on demand or subject to annual renewals.