Fair Market Value Buyout
An end-of-lease option letting a business purchase leased equipment at its estimated current market value, rather than a predetermined fixed price.
Unlike a lease with a fixed or nominal buyout price, a fair market value buyout is assessed based on the equipment’s actual condition and value at the end of the lease term, which can be higher or lower than originally expected.
Leases with a fair market value buyout option often have lower monthly payments than those with a fixed buyout, since the lessor is taking less certainty about the equipment’s residual value into account upfront.
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