There are three main types of equipment leases, each with advantages for particular business situations:Operating Lease (Fair Market Value Lease). At the end of the lease period, the customer has the option of returning the equipment or buying it at its fair market value. This type of lease helps the customer avoid obsolescence.
$1 Buy-Out Lease (Conditional Sale Contract). The customer buys the equipment at the end of the lease term for
$1. The payments during the lease term cover the full cost of the equipment, plus interest. This lease is useful for firms that eventually wish to have full ownership.
10% Purchase Upon Termination (Stated Purchase Option). The customer buys the equipment at the end of the lease term for 10% of the initial value. This is useful for customers who expect to keep the equipment, and wish to establish a guaranteed purchase price at the beginning of the process.
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