The dollar buyout lease earns its name from what happens at the end of the term: you write a check for one dollar and the title transfers. The machine is yours, free and clear, for the price of a vending machine snack. Between now and that dollar, you make fixed monthly payments on the same structure as a loan, because that is functionally what this is. The payments are slightly higher than anFMV leaseon the same equipment, and significantly lower than the confusion of not knowing what the end-of-term purchase option will cost you.
For operations that want ownership, need the depreciation benefits, and prefer the certainty of a fixed end-of-term outcome, this structure removes the question marks that FMV leases introduce.
Structure and Economics of the Dollar Buyout
In a dollar buyout lease, the lender holds the title during the term and you make monthly payments that amortize the full cost of the equipment plus the financing cost. Because there is no residual value assumption the lender is carrying at term end, you pay for 100 percent of the equipment's value over the course of the lease, plus interest. This makes the payment higher than an FMV lease but gives you the same total cost profile as an equipment loan, just packaged in a lease document structure.
Many lenders offer dollar buyout leases because they fit certain tax and accounting treatments cleanly. For companies that want Section 179 deduction eligibility paired with a payment that looks like a lease on the income statement, the dollar buyout lease bridges that gap. Your tax advisor can confirm the specific treatment based on your entity structure and the lease terms.
The practical difference between a dollar buyout lease and a loan is mostly administrative. The documentation is a lease agreement rather than a loan agreement. The title stays with the lessor until the final $1 payment rather than transferring at closing. The security interest mechanics differ slightly. But the economic outcome, monthly payment amount, total cost, and end-of-term ownership, is nearly identical to a standard equipment loan.
Who Uses Dollar Buyout Leases
Operations with clear, long-term relationships with their equipment favor the dollar buyout. Afood and beverage manufacturerthat has spec'd its loading dock lift trucks to a specific configuration and plans to run those trucks for seven to ten years wants ownership, full stop. The FMV lease introduces end-of-term uncertainty they do not need. The dollar buyout delivers ownership on a schedule.
Operators pursuingSection 179 expensingin the year of purchase often choose the dollar buyout specifically because of the deduction eligibility. The IRS treats dollar buyout leases similarly to conditional sales contracts: ownership intent is clear from the start, and the deduction treats the full purchase price as an expense in the year of service placement, regardless of whether the payment is structured as a monthly lease payment.
Companies that have historically used equipment loans but are switching lenders or working in a market where the lender prefers lease documentation also land on the dollar buyout. It functions as a loan replacement without requiring the operator to change anything about how they think about the equipment or use the machines.
Narrow-aisle reach truckfleets, which are often custom-configured to a facility's racking and aisle dimensions, are a common dollar buyout candidate. The trucks are not interchangeable with general inventory. They are spec'd for that building. The operator has no interest in returning them and every interest in owning them outright when the payments are done.
Payments, Terms, and What to Expect
Payment on a dollar buyout lease is comparable to a standard equipment loan because both amortize the full asset value. For a new counterbalanced forklift at $45,000, a 60-month dollar buyout might run somewhere in the neighborhood of $850 to $950 per month depending on the rate and credit tier, similar to what the same loan structure would produce. The monthly difference between a dollar buyout and an FMV lease on the same equipment can be significant, sometimes $200 to $400 per month per truck, because the FMV lease does not amortize the full asset cost.
Terms typically run 36 to 72 months on new equipment and 24 to 60 months on used, depending on the equipment's age and expected remaining useful life. We run the payment at multiple term lengths so you can make the trade-off between monthly obligation and total financing cost with real numbers in front of you, not estimates.
Forfleet purchasesof five or more units, we structure the dollar buyout as either individual lease documents per unit or a master lease with multiple schedules. The master structure simplifies the accounting and often produces a slightly better rate as a portfolio deal.
Comparing Dollar Buyout to Similar Structures
The dollar buyout and the FMV lease are the two most common equipment lease structures in the lift truck market. The choice between them is a function of how long you plan to keep the trucks and whether end-of-term ownership is a given or a maybe.
If you keep trucks eight-plus years, dollar buyout or loan. If you refresh on a four to five year cycle, FMV lease is the better payment structure and the return option simplifies disposal. If you are somewhere in between, the dollar buyout with a shorter term, say 48 months, gives you owned equipment faster and keeps the payment in a reasonable range without extending the commitment further than the refresh cycle warrants.
For borrowers also evaluating anequipment loanalongside the dollar buyout lease, the practical difference often comes down to lender preference, rate availability, and accounting treatment. We model both and show you the actual payment difference. In most cases, the rate on a dollar buyout lease is within a few basis points of the equivalent loan, and the choice comes down to administrative preference rather than economics.
Frequently Asked Questions
Get a Dollar Buyout Quote Today
Equipment, quantity, and whether you need the Section 179 benefit this year. That is what we need to start. We will quote the dollar buyout, the FMV lease, and the equipment loan side by side so you have a complete comparison before you decide. Same-day quotes. Decisions in 24 hours. Funding generally lands within seven to fourteen days.