Operating Lease / True Lease
An operating lease is usually used to obtain equipment for a fixed term at a lower payment. This type of lease is beneficial for businesses that want to keep a lease off of their financial statements. With an operating lease, only the right to use the property is transferred and not the actual ownership of the asset. The lessee is only required to record the operating expense of the property and it does not affect their balance sheet. An operating lease forces the lessee to assume some risk of ownership, but also allows them to enjoy some tax deductions due to the depreciation of the asset as well as the interest paid on the lease.
A True Lease/FMV is another term for a tax lease where, for IRS purposes, the lessee (the customer) could claim the entire amount of the lease payment as an operating expense or tax deduction. This type of lease typically provides the lowest monthly payment, and can often be structured to meet the requirements for operating lease treatment.
A True Lease/FMV also gives you the option of purchasing the equipment for fair market value when your lease has matured. A fair market value (FMV) lease is an equipment lease in which, at the end of your lease term, you have the choice of returning your leased equipment, continuing your current lease at an FMV renewal option, or purchasing the equipment you’re currently leasing at its fair market value.
What Are the Benefits?
With these types of leases, the payments are typically lower than they are for a standard loan, and flexible payments are available, as well. For example, monthly adjustments may be made if you can afford to pay a little more or a little less each month. The entire cost of the equipment can be financed, which means very little cash is needed up front. Leasing the equipment you need, rather than purchasing it, frees up funds for other business expenses.
Our extensive experience in finance and business leasing means Tetra Corporate Services will work with you to help your company meet its equipment financing needs. Tetra is devoted to providing our clients with solutions since 1986, and as such, we are uniquely able to determine the correct lease for you. If you’re looking to avoid technological obsolescence with your equipment, have minimal cash up front, and want low, flexible monthly payments, Tetra will help you structure an operating lease that’s right for your company.
Find out how Tetra’s creative leasing solutions can help you get the equipment you need. Call us at (800) 417-0548 or get a quote today!