There are several different types of equipment leases, with some of the more common including Fair Market Value leases, TRAC leases, and Dollar Buyout leases. Depending on the type of equipment lease and the underlying economics, the lease may be classified as either an operating lease or a capital lease for accounting treatment. The underlying equipment is among the most important factors in determining which equipment lease type to choose. Each type of equipment has different attributes which may affect the following variables:
- Useful life
- Secondary market value
- Speed of obsolescence
- Ease of return
- Cost of return
- Likelihood of loss or damage
If you use the wrong equipment lease type to finance a piece of equipment, the result can be higher than expected costs. Understanding the asset-specific characteristics, which drive risk, is critical to evaluating any equipment lease proposal. LPRS specializes in helping lessees assess the following equipment lease types:
