When it comes to financing construction equipment, companies have a range of options available. One financing solution that has gained popularity due to economic instability is Fair Market Value (FMV) leasing. Read on to find out if an FMV lease is the right option for you and how DLL can tailor a financing solution to suit your needs.
What is FMV leasing?
DLL offers FMV leasing as an equipment finance solution that may be tailored to meet the specific needs of the construction industry. As a standard industry financing tool, FMV leasing offers a flexible financing solution that enables end users to have access to the latest versions of equipment and technology, without the hassle of ownership.
FMV leasing may be an off-balance-sheet* financing solution that allows companies to lease equipment for a specific term with the flexibility to return it or extend the lease at the end of the term. Customers may also have an option to purchase** the equipment at the end of the term for its current fair market value.
Advantages of FMV leasing
FMV leasing offers several advantages for construction companies, especially in a volatile market:
- Flexibility: One of the primary advantages of FMV leasing is its flexibility. Companies can select the lease terms that work best for them, including the length of the lease, payment frequency, and end-of-term options. This flexibility allows companies to adjust lease terms to fit their specific needs and financial situation, which is particularly important in a volatile construction market where cash flow may be unpredictable.
- Lower upfront costs: With an FMV lease, the lessee is not required to make a large down payment or invest in the equipment. This reduces the upfront costs of acquiring equipment and allows companies to preserve their capital for other business expenses, such as labor and materials.
- Predictable expenses: FMV leasing allows companies to predict their expenses over the course of the lease term. Since payments are based on the current market value of the asset, lessees may budget for their lease payments with a higher level of accuracy. This helps companies to avoid unexpected expenses that could negatively impact their financial stability.
- Access to the latest technology: FMV leasing allows companies to access the latest equipment and technology without the high upfront costs of purchasing or financing. In a market where new technology is constantly evolving, this allows companies to stay competitive by using the most advanced equipment and technology available. Utilizing an FMV lease now would also allow you to upgrade to newer, more sustainable, equipment down the road without the need to first dispose of your existing equipment.
- Risk mitigation: FMV leasing may help mitigate risk in a volatile market. Since the lessee is not responsible for the residual value of the equipment at the end of the lease term, the company is not exposed to the risk of depreciation or market fluctuations. Additionally, companies may opt for lease-end options that allow them to return the equipment or purchase** it at its fair market value, giving them more flexibility regarding their assets.
Let DLL help finance your construction assets
DLL is a leading global provider of asset-based financial solutions, including FMV leasing, for businesses across a range of industries. DLL has a strong focus on sustainability and has developed innovative financing solutions to support businesses in reducing their environmental impact. Additionally, DLL has a deep understanding of the unique challenges facing the construction industry and has tailored its financing solutions to meet the specific needs of construction companies.
Learn more about DLL’s various financing solutions here.
Terms & conditions:
*Customers should consult with their Tax Advisors for more information on off-balance-sheet financing options.
**Tax and Accounting regulations may state that no contracted purchase option is allowed for FMV leasing. Customers should consult with their Tax Advisors for advice on purchase options.
All financing is in DLL’s sole discretion, and subject to credit approval, terms and conditions. Nothing herein constitutes tax advice and customers are advised to consult with their tax advisors prior to electing specific rates or options and for complete details specific to your situation.
