This is the most simple of lease transactions.  It begins with the first and last payment, and the equipment is delivered.  You complete the original term (for example thirty-four more payments for a 3 year lease) and the equipment is yours.  Although often derided as not being a "true lease," it can actually have better tax write-off implications than the other types of leases.  Since it qualifies as a "purchase," you can write off up to $24,000* in the year the lease begins -- much more than you are spending in that year!

*Be sure to check with your tax advisor

Fair Market Value

Often called a "True Lease," the payments are normally written off as they are made.  This is bookkeeping at its simplest.  Each payment is simply written off as an expense.* No depreciation schedules or fancy accounting formulas.  At the end of the lease you can purchase the equipment for its Fair Market Value, or continue to rent it, or return it in good condition (normal wear and tear is OK).  The decision is yours - and you don't have to decide until a couple of months before the end of the lease term.

Ten Percent Purchase Agreement (Commitment)

When you know that the equipment will continue to be valuable to you into the future, this can be your very best choice.  The regular monthly payments are lower, yet you know exactly what the cost of ownership will be.  And the ten percent "balloon" is paid at the end, with dollars that have been deflated by time.