If you’re in the market for a lease that will offer you low payments and tax benefits, a Fair Market Value lease (FMV) may be right for you.
Why’s that? There’s simple reasons, which include low monthly payments, financial flexibility and a lot more. The beauty of an FMV is that you’re able to get the equipment you need to keep your small business humming—even if your business is not a hummingbird aviary—and you won’t have to break the bank or mortgage your future on the lease. It’s a smart lease, in other words.
If you need more information on what an FMV is and how it compares to an operating lease, check out our blog post from November.
Here are the five biggest advantages. A hat tip to my brilliant Direct Capital colleagues Matt Sullivan and Scott Lynch for their expertise and help in assembling the list.
The Advantages Of An FMV
- You’ll get astonishingly low monthly payments, especially compared to other kinds of leases. That gives you greater financial flexibility over the course of the lease.
- There are tax benefits. Considerable ones. Because the asset you’re leasing does not become a long-term liability, you avoid taxation for that.
- Because the equipment is not recorded as an asset, all your lease payments are 100% tax deductible. Neat, no?
- There’s absolutely no obligation to purchase equipment at the end of the lease. You can negotiate the fair market value at the end and make the purchase outright, but you are under no obligation to do so. If you got a quality year out of that backhoe and you’re done with your projects, you can walk away at the end of the lease with no further cost.
- Because true leases require so little in upfront costs, you’ll essentially just be making your payments. That gives you that aforementioned flexibility and doesn’t cripple your company’s finances right off the bat.
Combine those five factors and you’ve got yourself some very compelling reasons to go after a FMV. If you want to hear even more, give Direct Capital a call today!
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