Types of Leases

Types of Leases

Sunset Financial Group offers a variety of leasing options to our clients. While each lease is individually crafted around your business needs, here is a list of some of the most common types:

Most Common

Lease Purchase ($101 Buy-Out)

This structure gives the Lessee the option of purchasing the equipment at the end of the term for $101. This type is ideal for businesses interested in owning the equipment. In essence, it’s an equity-building program that permits the Lessee to keep, sell or trade-in the equipment once the lease term expires.

FMV Lease (Fair Market Value)

When the end of this lease agreement is up, the lessee will have the option to either purchase the equipment for its market price, continue leasing the equipment at a renegotiated rate based upon its Fair Market Value, or just simply return it. The payments through the duration of the lease are lower than its fixed buyout counterparts, but overall cost would be higher, should the lessee opt to keep rather than upgrade or return the equipment. In many situations, there is a 10% “cap” that can be placed on the buyout.

Equipment Finance Agreement (EFA)

An Equipment Finance Agreement is an alternative financing option that differs from traditional lease operating agreements. While there are similarities between EFAs and traditional lease-purchases, in this case the Lessee retains ownership of the equipment financed throughout the term. This is in contrast to most equipment leases in which the Lessor owns and leases the equipment to the Lessee. The underwriter of the agreement simply files a UCC lien with the appropriate agency, using the equipment as collateral throughout the term of the agreement, but for the most part, EFA’s serve the same function as a lease-purchase.

10-20% PUT Lease (Purchase Upon Termination)

This lease has low monthly payments throughout the course of the agreement, but requires the Lessee to purchase the equipment at the conclusion of the lease contract with a pre-determined balloon payment. The balloon payment can range from 10-20% of the original invoice amount.

Additional Programs

Master Lease

A Master Lease is a document agreed upon by the Lessor and Lessee which dictates all of the terms and legalities of the lease agreement and allows the Lessee the ability to lease supplementary equipment by adding additional lease schedules under a previously negotiated Master Lease, eliminating the need for multiple credit checks, additional paperwork, etc. This lease agreement is particularly advantageous for businesses that receive or require consistent upgrades or modifications to their leased equipment. We are more than flexible with providing our clients with different lease agreements for additional pieces of equipment, all of which would be based around your conditions, needs, budget and desired payment schedule.

Wrap Lease

Wrap Leases enable Lessees with existing lease agreements to “wrap” their existing agreements into any additional new agreements. This helps businesses save money by consolidating existing lease agreements and essentially functions as a refinancing program for you current leases.


Sale-leaseback transactions allow businesses to raise capital while retaining the use of the assets that are required in their business. This is done by selling an owned company asset (usually a piece of equipment) to Sunset Financial Group, LLC and then leasing it back under a new contract. At the conclusion of the contract, all rights are transferred back to the Lessee. A sale-leaseback can present a business with a considerable source of working capital that can be used for a variety of different purposes.

TRAC Lease (Terminal Rental Agreement Clause)

A TRAC Lease gives the Lessee the option of purchasing the equipment at their conclusion of the lease. The price of the equipment is pre-determined in the original terms of the contract. A TRAC Lease is particularly valuable because it is a “true lease”; for tax purposes, the Lessor owns the equipment, depreciates the equipment and then passes on a portion of the tax depreciation to the Lessee in the form of a lower payment.

Please visit our page on sale-leaseback agreements for more details.

Municipal Lease

This program is available to all city and state agencies, including public school districts, municipal hospitals, public clinics, law enforcement and fire departments. Due to the tax exempt status of the Lessee, we are able to provide rates for equipment that are significantly lower than standard commercial rates.

Get a detailed estimate with a net cost analysis and return on investment.