VisualCalc’s Lease Analysis Calculator helps you determine the best type of capital equipment lease for your needs. The calculator compares three common types of leases: a True Lease, a $1 Buyout, and a 10% Purchase. Across each of these alternative lease types, the calculator helps you compare the maximum lease you can afford, the interest rate you will pay, and your monthly lease payment. The calculator also shows you the average annual cost of the lease across various lease terms.
A True Lease, sometimes referred to as a Fair Market Lease, assumes the lessee won’t make full payment and take possession of the equipment once the lease is complete. The lessee may be offered the opportunity to purchase the equipment for fair market value at the end of the lease, however. The key benefits to this type of lease are its lower monthly payments, and the fact that these monthly payments are 100% tax deductible operating expenses.
A $1 buyout lease offers the lessee the guaranteed option to purchase the equipment at the end of the lease for a nominal fee. Under this type of lease, the lessee has no uncertainty about the ultimate cost of the equipment. In this type of lease, the lessee is considered the owner of the equipment, and treats it like an asset that is depreciated over time.
A 10% Purchase lease, sometime called a 10% PUT lease, provides the lessee with a guaranteed option to purchase the equipment at the end of the lease term for a percentage of the original value. Monthly payments are lower than a $1 buyout lease, but, of course, the end-of-lease payment amount is higher.
