Fair Market Value (FMV) Lease

The lender buys the machine and leases it to you for a fixed term at a fixed monthly payment. That payment is lower than a loan payment on the same machine because you are not financing the full purchase price, only the portion of value consumed during the term. The difference sits in the residual, which the lender holds.

At term end, a qualified appraiser or the lender sets the fair market value. If you want to own it, you pay that number. If used-machine prices have softened or a newer spec is out, you hand the unit back and spec fresh. That is the core value of the structure: the residual risk belongs to the lender, not to you.

Documentation is straightforward. We typically work off three months of bank statements for deals in the $50k to $400k range, no tax returns needed. Credit in the B and C tier is fine. Most deals fund in one to two weeks. We do not run you through a month-long bank underwrite on a single telehandler.

One detail worth knowing: because an FMV lease is a true lease for accounting purposes, the payments may be fully deductible as an operating expense. Your tax advisor can confirm the treatment for your specific situation, but for operators who want a clean P&L impact, that is a real advantage over a loan structure.

Three buyer profiles show up on FMV leases most often. The first is the equipment rental company that needs to refresh fleet on a cycle. A 36-month FMV lease lets a rental yard put a fresh unit on the lot, earn through the highest-revenue years of that machine's life, and return or buy at end of term based on how the market looks. No one is locked into a machine that has run 4,000 hours if something better is available.

The second profile is the general or specialty contractor who has a multi-year project or a string of projects where a specific reach class is required, but no certainty beyond the contract horizon. Taking a 48-month FMV lease against a four-year project scope makes the payment a direct job cost, matches the term to the work, and avoids owning a machine beyond the project's useful life.

The third is the buyer who is stretching into a higher-capacity machine than they have owned before and wants to hold open the option to upgrade once the operation grows into the spec. An FMV lease on a high-capacity telehandler at, say, 12,000 pounds lets the operator prove the utilization before committing to ownership. At end of term, the decision to buy or step up is made with real hours-on-the-clock data, not guesswork.

Monthly payments on an FMV lease run lower than a loan or a dollar-buyout lease on the same machine because a meaningful residual value is built into the structure. A machine priced at $120,000 with a 35 percent residual means you are financing roughly $78,000 of value over the term, not $120,000. The spread shows up directly in the monthly number.

Terms commonly run 36, 48, or 60 months. Shorter terms carry slightly higher monthly payments but reduce total interest cost and get you to the end-of-term decision sooner. Longer terms lower the monthly but extend your commitment. The right term depends on the machine's expected duty, the project horizon, and how your cash flow looks quarter to quarter.

For used telehandlers, FMV leases are available but the residual percentage the lender sets is generally lower than on new iron, reflecting the machine's age, hours, and remaining useful life. The lower residual on a used machine partially offsets the lower purchase price, so the payment differential between a used FMV lease and a new FMV lease narrows more than buyers sometimes expect. Still, used FMV deals fund regularly and the structure is a legitimate option for a low-hour, well-maintained machine.

The FMV lease is one of several lease types we offer. Understanding the differences matters, because the wrong structure costs money.

A dollar buyout lease (also called a capital lease) is functionally a loan wearing lease clothes. You pay a higher monthly payment, the residual is $1, and ownership transfers at end of term. It makes sense if you know you want to own the machine and the depreciation treatment is a priority. It is the wrong call if you want a low payment and flexibility.

A TRAC lease is common in over-the-road trucking and applies to certain on-highway equipment. For most telehandler applications, the FMV lease or a standard equipment loan is the cleaner fit.

A sale-leaseback is the structure to reach for if you already own the machine and want to pull equity out of it while keeping it on the job. It is not a replacement for the FMV lease on new acquisitions, but it is a useful tool if equity is the problem.

For buyers who want to keep construction telehandlers working through a long project cycle with predictable monthly costs and no ownership commitment at the end, the FMV lease is usually the cleanest answer.