Equipment Leasing Purchase Options

Equipment leasing allows for the most flexible business financing options around, and the tax saving is great! Take a second to get familiar with the various Equipment leasing options and put this powerful financial tool to work for you and your business!

Equipment leasing is used by over 80% of US businesses today. Equipment leasing is a loan where a lender know as the lessor purchases the equipment and then rents it back to the business or company know as the lessee at fixed monthly payments for a pre-determined number of months.

At the end of the Equipment lease term, the lessee has the option to purchase the equipment for a pre-determined amount, keep the equipment and extend the lease, return the equipment, or upgrade equipment and begin a new lease.

The end-of-lease options are:

1. $1.00 purchase option- The lessee purchases the equipment for $1.00 at the end of the lease term. The $1.00 purchase option is also known as a full payout lease or a "disguised purchase." This option is for business that would like to own the equipment at the end of the lease.

2. 10% PUT- A "PUT" (balloon), is a pre-determined end-option based on 10% of the original financed amount. This allows the lessee to enjoy lower payments through the term of the lease, while still giving them the peace-of-mind knowing they still have a guranteed end-option amount. This is ideal for businesses that know they want to own the equipment at the end of the lease term, but want to enjoy lower monthly payments.

FMV (Fair Market Value)- A lease with a FMV purchase option is perfect for any company seeking tax and benefits that an operating lease provide. The entire monthly lease payment can be deducted as an operating expense. This reduces tax liability at the end of the year. With a FMV lease the company or business owner has the option to purchase the equipment leased at the end-of-lease, at its current fair market value. FMV leases have the lowest monthly payments.

Contact: Sam Clark of Commercial Capital Associates if you have additional questions about Equipment Leasing end of lease options at: samclark39@msn.com