End of lease options
End of lease options are determined at the origination of the lease and usually have an effect on the periodic payment amount.
Typical end of lease options are:
Fair
Market Value
At the end of the lease you have the option of buying the leased property for the Fair Market Value. This is considered an operating lease (Operating Lease-the end of lease market value cannot be predetermined nor can the certainty of exercising a purchase option at the end of the lease). This option tends to yield the lowest monthly payment.
$1.00
Purchase Option
At the end of the lease you have the option of buying the leased property for $1.00. This is considered a Finance lease. This option tends to yield the highest monthly payment.
10% Purchase
Option
At the end of the lease you have the option of buying the leased property for 10% of the original lease amount. This is considered a Finance lease. This option tends to yield a lower payment than the $1.00 Option and a higher payment than the Fair Market Value.
10% PUT
At the end of the lease, you guarantee to purchase the leased property for 10% of the original lease amount. This is considered a Finance lease. If the 10% PUT is a higher value than the expected Fair Market Value, then this option could give you the lowest payment.
Setting
end of lease options
To specify the desired end of lease option, use the FinLease Residual payment option.
To edit the residual payment, click the Residual option in the Payment options bar.
| Select | If the residual payment is | Examples |
| residual percentage | a percentage of equipment cost |
10 % purchase option |
| 10 % PUT | ||
| fair market value as a percentage of equipment cost | ||
| residual value | a fixed amount | $1 purchase option |
| fair market value as an amount |
Note: the residual payment is not displayed in the Amortization Schedule when it equals zero.
Related topics
| Fields and ranges |
| Lease data |
| Payment options |