A $1 buyout lease costs more every month in exchange for owning the copier when the term ends, and it pays off only if you actually keep the machine well past that point. Of the customers I have written a $1 buyout for, about 9 percent still have the machine two years after the term ended.
Both structures go by several names. The one that ends in ownership may be called a $1 buyout, a dollar buyout, a $1 purchase option, or a capital lease. The one that does not may be called a fair market value lease, an FMV lease, a true lease, or an operating lease. Your paperwork will use one of those and your rep may use another.
Is this the same as deciding whether to lease at all?
No. Three separate questions get folded together here, and it helps to pull them apart before looking at any numbers.
Leasing against buying outright is a different decision. This article assumes you have already decided to lease and are choosing between two structures.
Early buyout or termination means ending a lease before the term is finished. That is its own transaction with its own cost, and it has nothing to do with the purchase option at the end.
The notice deadline is the one people lose money on. Both structures require written notice inside a specific window to exercise or decline the end-of-term option, and that window closes months before the lease does. If you take one thing from this article, make it that. I have written separately about what happens if you miss the cancellation window, because it is the most expensive administrative mistake in this business.
What does each structure actually cost?
The payment difference is not arbitrary. A $1 buyout amortizes the full cost of the equipment plus interest across the term, because at the end you own it and the leasing company needs the whole thing back. A fair market value lease charges you for the use of the machine over five years and leaves a residual value in the company's hands, so the monthly figure is lower.
The table below runs both structures on the same machine. The figures are representative of what I see on a quote for equipment at this level.
| $1 buyout lease | Fair market value lease | |
|---|---|---|
| Monthly payment | $240 | $175 |
| Total of payments over 60 months | $14,400 | $10,500 |
| Premium paid across the term | $3,900 | none |
| End-of-term options | Pay $1 and keep the machine | Return it, renew, or buy it |
| Notice required to exercise | Yes, written, inside a window | Yes, written, inside a window |
| What you hold at month 61 | A five-year-old copier you own | A decision, and no asset |
Illustrative figures on a $12,000 machine over a 60-month term.
Two things the table cannot show you. The first is that "fair market value" is a term of art. The buyout price at the end is set by the leasing company, not by any market you can shop, so a business planning to buy at the end of an FMV lease is agreeing now to a price nobody will quote today. In my experience that figure typically lands around 20 percent of what the equipment originally cost.
The second is that the payment is only part of what a copier costs you. The click charges and the annual escalator sit in a separate agreement and often add up to more than the lease itself, which is why I would look at what a committed volume costs you before treating either monthly figure as the real number.
What actually happens at month 60?
This is where every article I have read on this topic stops, and it is the part that decides whether the premium was worth paying.
A five-year-old copier is not a broken copier. It generally still runs. What changes is the cost and the friction of keeping it running, and in my experience that change starts after about five years. A standard copier lease runs 60 months, which is the same five years.
Parts get harder to source as a model moves through its support life, so a repair that took a day in year two can take a week in year six. Service costs more on aging equipment because it needs more visits. Firmware and security updates end on a published schedule, which matters more than it used to now that copiers sit on the network and hold document data. Driver support for new operating systems eventually stops, and that one tends to surface as a company-wide problem the week after an IT upgrade.
Set against that, the machine has no payment attached to it any more. That is a real saving and I am not going to pretend otherwise. A business that keeps a paid-off copier for three more years genuinely comes out ahead of one that started a new lease.
What I see is that by month 60 the conversation has usually already moved to a replacement. Speed and scanning have improved, the finishing options on the old machine no longer match how the office works, security requirements have tightened, and the equipment refresh gets approved. The business then trades or disposes of a machine it paid a premium for five years to own.
When is the $1 buyout the right answer?
Sometimes it is, and the case for it is straightforward.
If you genuinely run equipment for seven to 10 years, ownership wins on total cost, and it wins even after the higher service costs of the later years. Some offices do exactly that. A low-volume machine in a small practice that prints predictably and has no appetite for new features can run a decade with routine service. If your last copier lasted nine years and you replaced it because it died, buy the next one.
The same holds if your volume is low enough that service costs stay small, if you have in-house help who can keep an older machine working, or if capital budget is easier for you to get once than operating budget is to get every year.
What that looks like in practice
A 20-person accounting firm we worked with leased a mid-volume color MFP with a finisher and chose the $1 buyout. Their printing was stable, the owner disliked the idea of handing back a machine the firm had already paid for, and they expected to keep it seven or eight years. At the end of the five-year term the meter was still relatively low, the machine was reliable, and it did everything they needed. They paid the dollar, put it on a service agreement, and ran it another three years before replacing it. Paying more to own it worked exactly as intended.
There is also a tax angle. A capital lease may allow a Section 179 deduction where an operating lease does not, and for some businesses that changes the arithmetic materially. I am not qualified to tell you whether it applies to you, and it is a genuine question to put to your own tax advisor before you sign either structure.
What I would not do is choose the $1 buyout because owning the machine sounds like the responsible option. That instinct is a good one in most parts of a business. It is worth roughly $3,900 on the illustrative figures above, and it only pays out if the machine outlives your interest in replacing it.
None of this is legal, financial, or tax advice. Lease structures and their tax treatment vary, and anything consequential deserves a look from your own attorney or accountant.
What should I check before I sign?
Five things, and you can do all of them with the quote in front of you.
Find out which structure the paperwork actually specifies. The term appears in the lease agreement, sometimes only in a purchase-option clause near the end, and the word "lease" on the front page tells you nothing about which one you have.
Add up the total of payments across the term. Multiply the monthly figure by the number of months and compare the two structures on that number, because the monthly payment is designed to be the number you compare and it is the less informative one.
Ask what notice is required to exercise or decline the option, and by when. Both structures have a deadline and both deadlines land well before the lease ends. This is the same window that catches businesses in the cancellation notice trap, and it applies whether you intend to buy the machine, return it, or renew.
Check whether the service agreement runs on the same term as the lease. They are frequently separate contracts with separate end dates, and owning the hardware does nothing about the service commitment.
Ask the vendor directly what the expected service life of the machine is, and how long parts and firmware support will be available. Get the answer in writing. If the support window is shorter than the term plus the years you intend to keep it, the ownership case is already weaker than it looks.
The number that decides it
The $1 buyout is worth paying for if you keep the machine long enough to use up the premium, and the honest way to answer that is to look at what happened to your last copier and how long you actually kept it.
Send us the quote you are looking at, or your current lease, and we will show you the total across the term for both structures with the click charges included, so the comparison covers the whole cost of each structure and not just two monthly payments. The contact form is at https://www.ftcgsolutions.com/contact, the office line is 480-275-7632, or email us at team@ftcgsolutions.com. It costs you nothing and the arithmetic is yours to keep whichever way you go.
Nothing here is legal, financial, or tax advice. Read your own agreement, and take Section 179 and anything else consequential to your own advisor.