A full payout lease (lease-to-own) is a type of lease which allows the lessee to possess and use equipment for a fixed period of time and for a set quantity of payments, typically at a fixed sum. The current value of the payment stream in this type of lease is equivalent to the acquirement cost of the equipment. The lease rate is calculated on the basis of the total purchase price of the equipment. On culmination of the term of a full payout lease, ownership of the equipment is transferred from the lessor to the lessee for a small payment. The lessee has several options at lease end including: returning the equipment, renewing the lease or buying the leased equipment.

The full payout lease is an excellent financing option if:

You wish to own the equipment in the future.

The useful life of the desired equipment is expected to be more than five years.

The dollar value of the asset is sizeable.

You would benefit from the flexibility in spreading out lease payments.

There are several differences between a full payout lease and a Fair Market Value (FMV) Lease. First, while a FMV lease enables you to purchase the equipment at lease end for its Fair Market Value, the full payout lease includes no such option. Secondly, in a full payout lease, the payments are based on the total cost of the equipment without assuming any residual value, unlike the FMV lease. Thirdly, a full payout lease includes no possibility of getting the equipment off the balance sheet, which is not so in the case of a Fair Market Value Lease. Another important difference is that while a full payout lease enables a borrower to take depreciation on the leased equipment, a FMV lease only lets the borrower take smaller payments.

If you are looking to lease equipment, contact Graphic Savings Group at 203.336.4034 or e-mail us at mail@graphicsavings.com.

Labels: fair market value lease, FMV lease, full payout lease, types of leases