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
310 Blue Bird Dr PO Box 506 Goodlettsville, TN
37070 Ph: 615-859-2004
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