Counter Budget Fiscal Cliff Issues and Technology Obsolescence with a Single Pay FMV Equipment Lease

A single pay fair market value lease of education technology equipment can help schools address budget “fiscal cliff” issues, as well as help manage technology obsolescence. The single pay FMV lease is increasingly popular among schools that have available ESSER or other funds and don’t want to incur interest expense.

How does a Single Pay FMV Lease work? The lease structure is set up so that the school or school district can make one up front payment for the right to use the equipment for the entire 3 to 5 year term of the lease. Since the payment is up front, no interest charges are incurred. Schools will pay a single payment equal to the cost of the equipment, less the residual investment in the equipment made by the lease finance company. In effect, the school is getting a discount equal to the lessor’s residual investment because the school doesn’t own the equipment, and has predictable options to return or purchase the equipment at lease expiration. Since the school may return the equipment, it won’t be stuck with older, obsolete equipment that it needs to sell. The lease finance company will take care of disposition and sale, and should help with organizing the lease end process. Proper device disposition also addresses data and environmental risks.

Here is an example: A school is acquiring notebooks costing $200,000. The desired use of the notebooks is 3 years. The lessor’s residual in vestment is 18% of cost, or $36,000. The school will pay $164,000 up front for the right to use the equipment for 3 years. After 3 years, the notebooks can be returned to the lessor, however the notebooks need to be in good condition, functioning, except for ordinary wear and tear. The lessor ships packing boxes to the school at lease end at lessor’s expense. The school packs the boxes and ships them to the lessor, also at lessor’s expense.

TEQlease Education Finance recently has completed several single pay FMV leases of education technology equipment, including laptops, interactive panels and chromebooks. Ask us about how these transactions were structured, for school and school district references, and about our favorable end of lease terms. TEQlease Education Finance is dedicated to helping schools get technology into the classroom on competitive, budget friendly terms. Your assigned territory account managers have closed many education transactions and have experience in your state.