Cost

$1 Buyout Lease

A lease agreement where you own the equipment for $1 at the end of the lease term.

Detailed Explanation

A $1 buyout lease (also called capital lease or finance lease) is structured so the lessee automatically owns the equipment at lease end for a nominal $1 fee. Monthly payments are higher than FMV leases because they cover the full equipment cost plus interest. This lease type offers tax benefits (equipment depreciation and interest deductions) and ensures ownership without negotiating buyout prices. Ideal for businesses that plan to keep equipment long-term or have specific tax planning needs. Unlike FMV leases, there's no return option or upgrade flexibility.

Examples

$10,000 copier, 60 months = ~$200/month
Total cost: $12,000 ($10K + $2K interest)
Own equipment at month 60 for $1
Tax benefits: Depreciate equipment value

Related Terms

Lease Rate Factor (LRF)

The multiplier used to calculate monthly lease payments based on equipment cost.

Fair Market Value (FMV) Lease

A lease where monthly payments are lower, but you must buy, return, or refinance the equipment at fair market value at lease end.

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