What exactly is a Fair Market Value Lease?
Have you started to look for Equipment Financing or Leasing and gotten confused by all the different words thrown out there. Words like Fair Market Value, Capital Lease, 10% Buy-outs and other confusing terms?
Securing capital for an equipment purchase is a tedious task in itself. When you throw in some confusing complicated terms, it can become a headache quick.
So what exactly is a fair market value lease?
A fair market value lease is an buyout option that is presented to you at the end of a lease term. FMV leases typically have the lowest monthly payment option because the buyout option is typically more costly than other options like $1 buy outs. Why do they call it a FMV? At the end of the lease term, the amount needed to buy out and purchase the equipment would be the Fair Market Value of the equipment. They determine this by using a complicated method that would bore us all to death.
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If you want to get a better understanding of the types of leases there are out there, check out our Beginners Equipment Finance and Lease guide!
In our Guide, you’ll learn:
- How exactly are lease rates determined?
- What advantages and disadvantages are there to Equipment Financing
- A complete breakdown of the Finance Process from start to finish
- Most common obstacles that arise when trying to get financing in place
- What to look for in a good Equipment Finance company.
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