Fair Market Value Lease: Pay for Use, Not Ownership

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Fair Market Value Leasing with CHG-MERIDIAN

A fair market value lease (FMV lease) charges you for the value you use during the term, not the full value of the asset.

The lessor estimates what the equipment will be worth at term end and prices the lease against the difference. CHG-MERIDIAN holds that residual value risk, so your monthly payment is much lower than traditional financing.
In the US this structure is called a fair market value lease; in Europe its equivalent is an operating lease.
CHG-MERIDIAN has built its fair market value leasing model around this structure since 1979, matching it to your technology lifecycle, financing needs, and refresh strategy.
An independent partner: no manufacturer affiliation, no bank ownership.

How a Fair Market Value Lease Works

You use the equipment Fixed monthly payments across a defined term. You run the equipment through its productive life without tying up capital in ownership.

CHG-MERIDIAN carries the risk We retain ownership and manage residual value at end of term. We absorb the risk that the equipment is worth less than projected, so you do not.

Return, extend, or refresh At term end, return the equipment, extend under revised terms, or refresh to current-generation technology. No residual payment, no disposal burden.

Equipment CHG-MERIDIAN Leases Under a Fair Market Value Structure

Enterprise IT Infrastructure

Servers, storage arrays, network switches, routers, and data-center hardware on defined refresh cycles.

End-User Devices and Laptops

Laptops, desktop workstations, tablets, thin clients, and mobile devices across the fleet.

Forklifts and Lift Trucks

Counterbalance forklifts, reach trucks, order pickers, and turret trucks on planned replacement cycles.

Warehouse Automation Equipment

AGVs, autonomous mobile robots (AMRs), goods-to-person systems, and conveyor automation.

Manufacturing and Industrial Equipment

CNC machines, robotic welding systems, and industrial production equipment.

Medical Imaging and Diagnostic Equipment

MRI, CT, and PET scanners, digital X-ray, and fluoroscopy systems.

Surgical and Clinical Technology

Surgical robotic systems and clinical technology on multi-year lifecycles.

Don't See Your Equipment?

CHG-MERIDIAN manages over $14 billion in leased assets across hundreds of equipment categories. If it depreciates and holds resale value, we can likely structure an FMV lease for it.

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How a Fair Market Value Lease Differs from Other Financing Structures

Enterprise teams usually weigh a fair market value lease against three alternatives. Here is how the structures compare.

Structure	Monthly payment	Residual value risk	End of term	Best for
FMV lease	Lowest; you finance use, not the full asset	CHG-MERIDIAN	Return, extend, or buy at fair market value	Assets you refresh on a cycle
$1 buyout lease	Higher; you finance the full asset	You (lessee)	Own it for a nominal $1	Assets you intend to keep
Capital purchase	Full cost up front	You (lessee)	You own it and handle disposal (ITAD)	Long-life, stable assets
As-a-Service (HaaS, DaaS)	Per-device fee, bundles managed services	Provider	Varies by contract	Financing plus managed services in one

Independent, Global, and Structured Around Residual Value.

CHG-MERIDIAN manages over $14 billion in assets across 35 countries, and has structured fair market value leases as the core of its model for more than 45 years. Our independence (no manufacturer affiliation, no bank ownership) means every lease is structured in the lessee’s interest, not to move product or clear service debt. Fleet-wide visibility comes through tesma, our lifecycle management platform, so you can see and plan every asset across the portfolio.

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What Happens at the End of a Fair Market Value Lease?

At the end of a fair market value lease, you have three options:

Return the equipment
Extend under revised terms
Purchase at fair market value

Return is the usual choice, and it is what differentiates a FMV lease from a $1 buyout.

CHG-MERIDIAN runs the full end-of-term process: return logistics, condition assessment against agreed standards, and certified data erasure for data-bearing devices (NIST 800-88-compliant for IT). You carry no disposal burden and no residual-value risk, and standard notice periods are flagged early, so the transition is a scheduled event, not a scramble.

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Fair Market Value Lease: Frequently Asked Questions

What is a fair market value lease?

CHG-MERIDIAN retains ownership throughout the term. Payments are fixed monthly amounts set at signing, calculated from the asset’s cost minus its estimated fair market value at term end, which is why they are lower than a full-payout structure.

Is an FMV lease an operating lease, and how does it affect the balance sheet?

An FMV lease is classified as an operating lease. Under ASC 842, that classification still shapes your income statement: a single straight-line lease expense rather than separate interest and depreciation. It does not keep the lease off the balance sheet. Since ASC 842 took effect (2019 for public companies, 2022 for private), operating leases appear as a right-of-use asset and a matching lease liability. The pre-2019 "off-balance-sheet" pitch no longer applies, so be wary of any provider still making it. Under IFRS 16 (outside the US) the lessee operating/finance distinction is removed entirely. Confirm treatment with your accounting team.

What happens at the end of a fair market value lease term?

You return the equipment, extend under revised terms, or purchase it at fair market value. There is no obligation to buy and no residual payment due. CHG-MERIDIAN manages return logistics, condition assessment, and certified data erasure for data-bearing devices.

What is the difference between an FMV lease and a $1 buyout lease?

In an FMV lease you return the equipment at term end and the lessor carries residual risk, so payments are lower. A $1 buyout lease finances the full asset so you own it for a nominal payment at the end: higher payments, and depreciation risk and disposal stay with you. FMV suits use-and-refresh; $1 buyout suits intended ownership.

How do I know if a fair market value lease is right for my organization?

An FMV lease fits best when technology refreshes on a regular cycle, when residual value is meaningful, and when you have no need to own the asset past its useful life. If you plan to keep equipment well beyond that, a $1 buyout or purchase may fit better. A short fleet review with a CHG-MERIDIAN specialist will confirm the right structure per asset class.

How does a fair market value lease affect the balance sheet?

Under ASC 842, operating leases appear on the balance sheet as a right-of-use asset and corresponding lease liability. However, they are classified as operating expenses rather than capital items, which typically produces a different financial profile than ownership or a capital lease. The monthly payment is expensed rather than depreciated, and the organization carries no residual value exposure.