Lease paperwork can make it look like you're choosing between interest rates. The bigger choice is what happens at the end of the term. Here are straight answers on each structure.
What is a Fair Market Value (FMV) lease?
An FMV lease has the lowest monthly payment because you're only paying for the portion of the machine's value you use. At the end, you can return the machine, renew the lease, or buy it at its fair market value at that time. It suits contractors who upgrade often or need a machine for a defined period. Payments are usually treated as an operating expense for taxes.
What is a 10% purchase option lease?
It sits between an FMV lease and a $1 buyout. Payments are moderate, and at the end you can buy the machine for 10% of its original cost. It's a good fit when you expect to keep the machine but want a lower payment than a full-payout structure.
What is a $1 buyout lease?
A $1 buyout (capital) lease is built to transfer ownership. Payments cover essentially the full cost, and you buy the machine for $1 at the end. For tax purposes it's usually treated like a purchase, so it may qualify for depreciation and Section 179.
What is an Equipment Finance Agreement (EFA)?
An EFA is a straightforward finance-to-own contract. You own the equipment from the start, the lender holds a security interest, and you make fixed payments over the term. There's no buyout step at the end. EFAs are popular for used and private-party purchases.
How do the structures compare?
- Lowest payment: FMV lease → traditional lease → 10% option → $1 buyout and EFA.
- Ownership: EFA and $1 buyout give you ownership; 10% and FMV leases give you the option to buy.
- Flexibility to upgrade: highest with FMV leases.
- Tax treatment: EFA and $1 buyout are generally treated as purchases; true leases are generally treated as expenses. Confirm with a tax pro.
Which terms are available?
Through EquipMarket's lending partner, terms of 24, 36, 48, 60 and 72 months are available on all four structures: EFA, traditional lease, 10% FMV and $1.00 buyout. Use the payment calculator on our Financing page to compare them on the same machine.
How do I choose?
- Keeping the machine 7+ years? Choose an EFA or $1 buyout.
- Upgrading every 2–4 years? Choose an FMV lease.
- Not sure? A 10% option keeps the payment lower while preserving ownership.
More background: lease vs. finance heavy equipment.
How do I apply for equipment financing through EquipMarket?
EquipMarket works with our lending partner, Southend Capital, to finance dealer and private-party equipment. One short application gets you pre-qualified. Terms run 24 to 72 months, and you can choose an Equipment Finance Agreement (finance-to-own), a traditional lease, a 10% fair-market-value lease or a $1 buyout lease.
Apply for financing now → or compare financing options and estimate a payment. Rates and approval are set by the lender based on your credit, time in business and the machine.
