Terms are available from 24 to 66 months for most types of equipment. There are several different types of lease structures available.
Canadian Lease Structures vs. U.S. Lease Structures
Common Canadian Lease Structures
- Stretch Lease
- Full Pay-Out
- Fair Market Value
Stretch Lease
This is the most popular type of lease provided by Alliance. In this type of lease, the contract is structured as a true “Fair Market Value” lease, however, the contract provides for a fixed, guaranteed “Early Purchase Option” that can be exercised by the customer, after a specific number of payments. Here are the most common terms:
| Total Term | Early Purchase Month | Early Purchase Amount (percent of original equipment cost) |
| 27 months | 24th month | 10% |
| 39 months | 36th month | 10% |
| 52 months | 48th month | 10% |
| 66 months | 60th month | 10% |
Other terms and purchase options are available.
Full Pay-Out
Lease In this type of lease, after the end of the term, the customer can purchase the equipment for a nominal amount; for example: $1 $10 or $100. This form of lease, while once popular, is being used less and less by businesses, as the monthly payment is of course higher than with a Stretch Lease, or Fair Market Value lease and many accounting and tax professionals are advising businesses to avoid this type of contract.
Fair Market Value
Because this type of lease does not have a fixed purchase option, it is designed for a customer that truly does not want to own the equipment, but would rather return, upgrade, or continue to lease the equipment at the end of the term. Depending on the type of equipment, and its anticipated “market value” at the end of the proposed term, this type of contract can provide the lowest payments. This type of lease is most ideally suited to technology equipment. Note that if the customer wants a combination of a lower monthly payment and a guaranteed purchase option, then a Stretch Lease provides the best alternative.
Common U.S. Lease Structures
- Full Pay-Out Lease
- 10% buy-Out Lease
- Fair Market Value Lease (True Lease)
Full Pay-Out
Lease Designed for those who are certain that they wish to own the equipment at the end of the lease term, for the lowest possible end-of-term cost. At the end of the term, the equipment is purchased for $1. A nominal charge for processing a title transfer may apply. The monthly payments on a Full Pay-Out lease are generally higher than other types of plans. This type of lease plan is not offered in all States.
10% Buy-Out Lease
This plan offers a lower monthly payment than a Full Pay-Out lease, as 10% of the original equipment cost is deferred to the end of the term. At lease end, the customer can purchase the equipment for an amount equal to 10% of the original cost. Other options may also be available to the customer at this time, including: return the equipment, extend the term or refinance the equipment.
Fair Market Value Lease (True Lease)
Because this type of lease does not have a fixed purchase option, it is designed for a customer that truly does not want to own the equipment, but would rather return, upgrade, or continue to lease the equipment at the end of the term. Depending on the type of equipment, and its anticipated “market value” at the end of the proposed term, this type of contract can provide the lowest payments. This type of lease is most ideally suited to technology equipment.
