$1.00 Purchase Option Lease

Also called a "dollar out" lease, this plan is a capital lease from an accounting standpoint, and considered an installment sale from a tax standpoint. At the end of term the customer simply pays $1.00 and title to the equipment transfers to them. This plan is best suited for customers who prefer the benefits of ownership and are confident that they will want to keep the equipment working for them after the lease term has expired.

10% PUT

This plan is similar to the $1.00 plan, but instead of a dollar, the customer has agreed in advance to pay 10% of the original lease amount at the end of term. This "PUT" is a required element of the plan, not an option at end of term, and title to the equipment transfers to the customer. Also considered a capital lease from an accounting standpoint and an installment sale from a tax standpoint. Best suited for customers who want the lower monthly payment compared to the $1.00 plan, but who are sure they will want to take title to the equipment at end of term.

10% Purchase Option

This plan provides customers with a fixed price purchase option at end of term, but customers are not required to exercise it. This type of plan is typically considered a capital lease from an accounting standpoint, and a tax lease from a tax standpoint. This type of plan is not available for all types of assets and term lengths. It is best suited for customers who want to hedge their bets by retaining the flexibility to either return the equipment or purchase it at end of term, but who want to cap the purchase option upfront.

Fair Market Value Lease

This plan provides maximum flexibility to customers who want the lowest monthly payment and aren't sure they will want to keep the equipment at end of term. It is considered a tax lease from a tax standpoint, and is usually classified as a capital lease from an accounting standpoint. This plan is best suited for customers who prefer the benefits of equipment use, rather than the benefits of equipment ownership. At end of term the customer has three options:

1. Return the equipment to the leasing company

2. Renew the lease

3. Purchase the equipment for fair market value (FMV), which is often defined as what a willing seller and a willing buyer agree to at arm's length.