A salesperson quotes you a copier at $189 a month and calls it a "fair market value" lease. It sounds official, but most buyers have no idea what that phrase actually controls. It sets what happens at the end of your term, and it can quietly cost or save you thousands. Here is what a fair market value copier lease really is and when it makes sense.
What a fair market value lease actually is
A fair market value lease, often shortened to FMV, is a lease where you do not own the copier at the end. Instead, when the term ends you get three choices: return the machine, buy it for whatever the leasing company decides it is worth at that point, or renew. The "fair market value" is the price to buy it out, and the leasing company sets that number, not you. On a typical office copier after a 60-month term, that buyout might land anywhere from 10 to 20 percent of the original value.
This is the opposite of a dollar buyout lease, where you own the copier for one dollar at the end. FMV keeps ownership with the leasing company, which is exactly why the monthly payment is lower.
Why the monthly payment is cheaper
Because the leasing company still owns a machine with resale value at the end, they are financing less of the total cost across your payments. That drops the monthly number. On a $9,000 copier, an FMV lease might run $175 a month over 60 months, while a dollar-buyout lease on the same machine might run $210. Over five years that is a real gap. You can see how the two structures compare in our guide to the FMV lease and lease versus buy decision.
The tradeoff is simple. You pay less each month, but you do not build toward owning anything. If you plan to upgrade to a newer machine in five years anyway, that is fine. If you want to keep the copier for a decade, FMV can end up costing more.
When an FMV lease makes sense
FMV works best for businesses that want the newest technology and plan to refresh their equipment every few years. Law firms, marketing agencies, and busy medical offices that run high volumes and need current features tend to lean FMV, because they will hand the machine back and get a new one anyway. The lower payment frees up cash, and the end-of-term buyout never becomes their problem.
It also helps with accounting. An FMV lease often qualifies as an operating lease, which can keep the obligation off your balance sheet in a way a capital lease does not. Ask your accountant, because the rules changed in recent years and depend on your term and buyout terms.
The catch to watch for
Two things bite people on FMV leases. First, the end-of-term buyout price is not fixed, so if you fall in love with the machine and want to keep it, you are negotiating from a weak spot. Second, FMV leases almost always carry return requirements: the copier must come back in working order, sometimes in original packaging, shipped at your cost. Budget a few hundred dollars for return shipping and factor it in.
What most guides miss
Here is what the sales rep will not volunteer: on an FMV lease, the "fair market value" is whatever the leasing company reasonably determines, and there is often no cap written into the contract. If you intend to buy the copier at the end, negotiate a fixed or capped purchase option before you sign, not after. Ask for language like "purchase option not to exceed 15 percent of original cost." Get it in writing. Without that cap, you are trusting the leasing company to be reasonable at the exact moment they have all the leverage. A good local provider will agree to a cap without a fight. One that refuses is telling you something.
FMV versus dollar buyout at a glance
Put the two side by side and the choice gets clearer. An FMV lease means a lower monthly payment, the newest technology every few years, and no ownership at the end. A dollar buyout means a higher monthly payment but you own the machine outright when the term ends. If you value cash flow and fresh equipment, FMV wins. If you value ownership and plan to keep the copier for the long haul, the dollar buyout wins. There is no universally right answer, only the one that fits how your business uses the machine. Run both numbers over the full term, add in service and supplies, and let the total cost guide the decision rather than the monthly headline.
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