FAIR MARKET VALUE (FMV) LEASE
FMV refers to the value of the equipment at the end of the lease term. So, the cost of an FMV lease is discounted by the expected value (i.e. residual) of the equipment when the lease is completed (usual timeframes are 12-63 months). Unlike the $1 Buy-Out lease (described below), the lessee is not considered the owner of the equipment. The lessor depreciates the equipment and can pass the benefit on to the lessee in the form of lower monthly payment. This explains why FMV rates typically are lower than $1 Buy-Out or 10% Purchase Option rates.
$1 BUY-OUT LEASE
The lease is structured so the lessee can purchase the equipment at the end of term for $1. It provides the benefit of a loan (ownership) with the advantage of a lease (lower Payments). Typical lease terms are 12-63 months.
10% PURCHASE OPTION PLAN LEASE
Similar to the $1 Buy-Out structure except the purchase price at end of term is 10% of the equipment value as determined at the start of the lease.
A Municipal Lease is a tax-exempt financing vehicle designed to meet the special needs of state and local municipalities. These entities include School Districts, Police and Fire Departments, State and County Governments, Water Districts, Transit Authorities, Hospitals, and any other organization that can incur debt where the interest paid is exempt from federal income taxes.