$1 Out Lease Versus Fair Market Value Lease

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$1 out leaseAt Dean Office Solutions one of the top questions we get from customers are what kinds of leasing options we offer. We offer two kinds — a fair market value lease, and a $1 out lease.

A fair market value lease works like this. You lease the unit for however many years you need it for, and if at the end of the lease you decide you want to own it you can buy it for what it’s worth at that time.

A $1 out lease works more or less how it sounds. You lease the unit, make your monthly payments, and then pay a dollar to own the machine at the end of the lease period. You’re essentially financing the unit over a period of time.

Those are the basics of how the two types of leases work, but I’m going to cover more than that in this post. I’m also going to explain which is the better option between a $1 out lease and fair market value, and give you an expert tip on how to pay less for your unit at the end of a lease.

Which One Is Better?

The all-important question. Now that you know how each of these leases work, naturally you want to know what one is better. At face value the $1 out lease sounds like the better option — $1 must be significantly less than paying market value, right?

Well, you’re not wrong, but there are a few other things you need to consider. With a $1 out lease your payments are slightly more than they would be on a fair market value lease. So at the end of the day, if you make all your payments on both leases and then buy out the units, it equals out to the same thing.

But here’s a pro tip that not a lot of consumers know about, and most leasing companies won’t tell you. If you go with a fair market value lease instead of a $1 out lease and make all your payments, at the end of the lease you don’t necessarily have to pay market value for the unit.

That’s right, they would rather sell you the unit for something, than take it back and be stuck with it in their inventory. So proceed as if you’re going to return the equipment, and then once you get there make them an offer on the equipment.

Chances are they will be more than happy to barter with you than let you return the equipment, and you’ll be able to buy it out for much less than market value. If you go this route you can save money versus going with a $1 out lease.

Fair Market Value Or $1 Out Lease?

After all of that explanation, my recommendation is to go with a fair market value lease instead of a $1 out lease. A fair market value lease can be cheaper if you know you want to own the unit it at the end.

Think of leasing companies like banks. When you have a mortgage with the bank, they want to take your payments not your house. Leasing companies would rather make some money off their equipment than have you return it after a number of years.

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