Capital Equipment Financing FAQ

On a lease, you the customer make monthly payments on a piece of equipment. At the end of the term, you have the option to buy the equipment as outlined below:

• Small Purchase Option as low as $1.00, or
• A higher stated purchase option equal to 10% or 20% of the original equipment price, or
• At the fair market value of the equipment at the end of the lease.

On a loan, you the customer make monthly payments on a piece of equipment. Since you have owned the machine since the day you bought it, you do not have a purchase option at the end of the term.

• On a Loan, or a Lease with a $1 or $101 purchase option, you retain these tax benefits
• On a lease with a fair market value purchase option (known as an Operating Lease), the lender holds onto these tax benefits.

If you choose an Operating Lease, you will trade these tax benefits for a much lower payment. You would want to talk to your financial advisor to determine which is the best decision for you.