Types of Equipment Leasing

Types of Leasing

A One Dollar ($1.00) Purchase Option: Used as a financing tool when ownership is the goal. Provides for $1.00 Purchase Option at end of lease term. Lessee is treated as owner of the equipment for tax purposes.
Fixed Purchase Option Lease: Provides lower monthly payment, conserving cash flow. Includes predetermined purchase option to identify total lease cost in advance. A fixed amount of 10% to 30% is due at the end of the lease.
Fair Market Value Lease: (Often referred to as an "Operating" Lease) Provides off-balance sheet treatment. Produces lowest monthly payment. Purchase Option determined at end of lease term. (based on its fair market value)
MUNICIPAL LEASE: Leases for federal, state, county, or local government entities.
Sale Lease Back: Can be used as a refinancing tool where Lessee retains the tax depreciation and interest expense, or a true tax lease where the asset is removed from the balance sheet and treated as a Operating Lease or Capital Lease.
TRAC Lease: A true tax lease that allows for a predetermined purchase option at the end of the lease term. [only applicable for licensed over-the-road vehicles (Trucks, Tractors, and Trailers)].