Leasing business equipment generally results in one of four things happening at the end of the lease:
- You return the copier and walk away
- You purchase it for $1
- You purchase it for “fair market value” (FMV)
- The lease automatically renews
In this article, we’ll focus on two of the most common lease-end scenarios — the $1 buyout and the FMV buyout.
Lease buyout options can be a bit tricky. If you are offered the opportunity to purchase the copier for $1 at lease end, you can bet that you’ve essentially paid for it in full during the course of the lease. Sometimes, it’s better to simply agree on a purchase clause that allows you to buy the copier for FMV at lease-end. Your lease payments will be a bit lower, and you’ll feel genuinely free to do what’s best for your business at that point.
In a world of rapid technological advances, five years is a long time. You may be ready for a new up-to-date copier at that point. On the other hand, if you feel that you are likely to have fairly straightforward copier needs that are not likely to change that much, knowing that the monthly payment goes away after five years might be an attractive thought. Just keep in mind that, once you own the copier outright, maintenance and repair costs are coming fully out of your own pocket. On this point, you have to carefully weigh what such costs might be on a copier that is five years older and aging by the day.