Every so often on this blog, we’ll address some frequently asked questions about our most popular financing options so you can get a better understanding of the many options available to you and the benefits of each. This month’s Featured Finance FAQ focuses on the fair market value (FMV) lease, which sometimes qualifies as an operating lease.
What Is a Fair Market Value Lease?
With an FMV lease, your business can use the leased equipment for a set time period and on a consistent payment schedule. The terms of the lease are agreed upon in advance within the financing contract.
Most FMV leases have terms ranging from one to five years. At the end of the lease term, you will have three options for what to do with the leased equipment:
- Purchase it at current fair market value
- Re-lease the equipment over a period of 12 months
- Return the equipment
The choice is up to you and will depend on your business needs. If you’re not sure about what you want to do with a piece of equipment in the long term, an FMV lease gives you the freedom to hold off on a decision until your lease ends. However, that’s far from the only benefit of an FMV lease.
Some of the many other benefits include:
- One of the most affordable commercial leases
- Helps manage costs of equipment that requires frequent upgrades
- Includes fixed monthly payments for easier accounting
- Minimizes up-front costs of acquiring equipment
- Can receive 100% financing
- Obligations end with the completion of the lease
Is an FMV Lease the Right Choice for My Business?
FMV leases tend to be very affordable but can also be highly dependent on the equipment the company is looking to purchase. Used or specialized equipment is more difficult to finance through an FMV option. FMV leases may also require slightly stricter qualification requirements compared to other financing options. However, if you’re interested in an FMV lease for your business, be sure to speak with our financial specialists at Team Financial Group — never just assume you won’t qualify!
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Another way to evaluate whether an FMV lease is the right option for your business is to consider the type of equipment you’re looking to purchase. Some types of commercial assets that businesses tend to acquire using FMV leases include:
- Computers and tablets
- IT equipment (servers, software, etc.)
- Security systems
LaFleur Marketing Provides an FMV Lease Success Story
A recent example of a Team Financial Group client who received a fair market value lease is LaFleur. As a growing digital marketing company located in Grand Rapids, Michigan, LaFleur needed to move into a bigger and better office to keep up with the growth of their team and client base. Not wanting to sink too much available capital into furnishing the new office, LaFleur president and CEO Chip LaFleur got in touch with Team Financial Group for help.
We provided LaFleur with both a fair market value lease and a $1 buyout lease, which allowed the marketing firm to minimize the initial expenses of moving into a new space and conserve working capital. The $1 buyout lease helped LaFleur acquire high-end furnishings and office equipment while the FMV lease allowed the company to buy new laptops and accessories. These purchases helped LaFleur build an inviting and functional new office they plan to use for years to come.
Talk With Team Financial Group to Learn About Your Financing Options
Have questions about what type of commercial equipment lease is right for you? Let’s chat! If you’re ready to apply for a fair market value lease, fill out our easy online application and let us do the rest. Or, if you have questions about our offerings or your options, give us a call today at 616-735-2393 or fill out our online contact form.
The content provided here is for informational purposes only. For personalized financial advice, please contact our commercial financing experts.