What's actually going on
A fair market value (FMV) lease has a lower monthly payment because you are renting the use of the machine, not buying it. At maturity you return it, buy it at whatever the lessor calls fair market value, or renew.
A $1 buyout lease is a purchase spread over time. The payment is higher, but at the end you own the equipment for a dollar.
Sales conversations usually quote FMV payments and purchase-lease ownership in the same breath, which is where the confusion starts.
What to do in the next 48 hours
- 1Decide how long you realistically keep equipment. Under five years favors FMV. Seven years or more favors $1 buyout.
- 2Ask for both payments on the same configuration and the same term so you are comparing like for like.
- 3On an FMV quote, ask in writing what the end-of-term purchase option is and whether it is capped.
- 4Add the service and click charges to both. The finance structure is rarely what makes one deal cheaper.
The honest tradeoffs
- FMV keeps your payment and your commitment lower, but you own nothing at the end and an uncapped fair market value can be an unpleasant surprise.
- A $1 buyout costs more per month and leaves you owning a machine that is worth very little and getting more expensive to service every year.
Your next step
Questions people ask next
- Is a $1 buyout lease the same as buying a copier?
- Financially it is close. A $1 buyout lease is a financed purchase: you pay the full equipment cost plus interest over the term and then own the machine outright for a nominal dollar. The main practical difference is the accounting treatment and the fact that you cannot simply hand it back.
- What is fair market value on a copier lease?
- The price the leasing company will sell you the equipment for at the end of the term. Unless the lease caps it, the lessor sets that number, and it is often 10 to 20 percent of the original cost. Always ask for the cap in writing before signing.
More on a lease that's ending
- My copier lease is ending and I don't know what to do
- My lease auto-renewed and I never agreed to it
- I have to return a copier and I don't know the rules
- My copier lease is expiring: what are my actual options?
- I need out of my copier lease early
- What happens if I don't return the copier?
- How an evergreen clause keeps renewing my lease
- Should I rent, lease or buy the next copier?
- My lease deadline is days away: what do I do in the next 48 hours?
- Lease or rent a copier: what's the actual difference?
- What happens if I just do nothing when my copier lease ends?
- My copier bill keeps going up and nobody can explain why
- I think I'm overpaying but I can't prove it
- My copier keeps jamming and I've stopped trusting it