An FMV lease has lower monthly payments, and at term end you buy the machine at fair market value, renew, or return it. A $1 buyout lease costs more monthly but you own the copier outright for one dollar when the term ends.
Fair market value and $1 buyout are the two structures you will be quoted most often. The difference between them is simply who is expected to own the copier when the term ends.
With an FMV lease you are paying for use of the equipment, not for the equipment itself. Because the leasing company retains a residual interest in the machine, your monthly payment is lower.
At term end you generally have three options: buy the machine at its then fair market value, renew the agreement, or return the equipment. The important detail is that the buyout figure is not fixed at signing — it is determined at the end. If certainty matters, ask how that value will be calculated before you sign.
FMV suits businesses that expect to upgrade at term end and treat the copier as a service rather than an asset.
A $1 buyout lease is a financing arrangement structured as a lease. You are effectively purchasing the machine across the term, and at the end you take ownership for a nominal dollar.
Monthly payments are higher because you are paying down the full equipment value rather than part of it. In exchange there is no end-of-term negotiation, no residual to argue about, and the machine is yours.
This suits businesses that intend to keep the equipment well past the term and want total cost fixed and known at signing.
This is often the deciding factor. A $1 buyout is generally treated as a capital lease — you are considered the owner for tax purposes, which typically brings the Section 179 deduction into play on the equipment cost. An FMV lease is more commonly treated as an operating expense and deducted as payments are made.
Which is more advantageous depends on your tax position, and that is a question for your accountant. What matters here is knowing the structure has consequences beyond the monthly payment.
Compare total cost across the full term, not the monthly figure:
If you plan to keep the copier, $1 buyout usually wins on total cost. If you plan to upgrade, FMV usually wins, because you never pay for residual value you were not going to use.
The weak point of an FMV agreement is that the number you will eventually pay to keep the machine is not known when you sign. “Fair market value” sounds objective, but in practice it is assessed at the end of the term, and businesses are sometimes surprised by how it lands.
If you are considering FMV but think there is a reasonable chance you will want to keep the equipment, ask two questions before signing: how is the value determined, and is there a cap or a stated maximum? A capped FMV agreement removes most of the uncertainty. An uncapped one leaves you negotiating from a weak position, because by then the machine is installed, configured and embedded in your workflow.
Some agreements are presented as leases but contain a fixed percentage buyout — ten per cent of the original equipment value, for instance. These sit between the two structures and are worth identifying clearly, because the tax treatment and the total cost both differ from the simple cases above. If a quote does not plainly state FMV or $1 buyout, ask which it is and get the answer in writing.
Ask honestly whether you will still want this specific machine in five years. If yes, look hard at $1 buyout. If your printing needs are likely to change, FMV plus a fresh conversation at term end is usually the better fit.
We quote both structures side by side so the trade-off is visible rather than buried. See copier leasing, or read what happens when your lease ends. Call (786) 788-7098.
FMV is cheaper month to month. A $1 buyout usually costs less in total if you intend to keep the machine, because there is no separate buyout to pay at the end.
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