Guide · If you need money this week
The equipment lease ends in 60 days with a $25,000 buyout. Return it, refinance it, or pay it?
By Alex Makowski Published
If the machine is worth keeping, refinance the buyout as a new equipment loan — the machine secures it, terms run two to five years, and the payment is usually close to the lease payment you were already making. Start ninety days out, not the week it is due. If the buyout is more than the machine is worth, return it and finance a replacement. Do not pay a balloon out of working capital; that is paying five-year money at six-month prices.
In this guide
- 01What the end of a lease actually offers
- 02Decide about the machine before the money
- 03Refinance the buyout as equipment, not as working capital
- 04If you are returning it
- Won't affect your credit
- Free, no obligation
- Up to $500K
01
What the end of a lease actually offers
A fair-market-value lease ends with a choice: buy the equipment at its current market value, return it, or extend. A dollar-buyout lease ends with a nominal payment and the machine is yours. A lease with a fixed balloon — a set lump sum written into the contract — is the one that catches people, because the number was decided years ago and the cash was not planned for.
The lessor's own guidance and every finance desk agrees on the timing: start six months before the end date, and no later than ninety days. The lessor's options narrow and their prices rise as the date approaches, and some contracts roll into an automatic extension at the old payment if you miss the notice window.
02
Decide about the machine before the money
Get the buyout figure in writing and get a market value from a dealer or an auction listing for the same model and hours. Three outcomes. The buyout is below market: buy it, because the equity is real. The buyout is about market: buy it if you will run it for years, because a known machine is worth more to you than to a buyer. The buyout is above market: return it, and put the cash toward a replacement instead.
Cost of $50,000, by product
03
Refinance the buyout as equipment, not as working capital
A buyout on a machine you are keeping is a purchase, and it finances the way any equipment purchase does: an equipment lender pays the lessor, the machine secures the new loan, and you pay over two to five years at a rate that reflects real collateral. For most shops the new payment is close to the lease payment they were already carrying, so the cash position barely changes. Two to five business days from the buyout letter.
The mistake is paying a $25,000 balloon with a working capital advance because it was faster. That is short, unsecured money for a long-lived asset, and it costs several times the equipment loan. If the deadline is genuinely days away and the lessor will not extend, bridge it with working capital and refinance the machine as equipment the following month.
04
If you are returning it
Read the return conditions: cleaning, wear standards, freight to the lessor's yard, and the notice period. Missed notice is the most common way a return turns into an unwanted extension. Then finance the replacement as equipment, and this time read the end-of-term terms before signing — a dollar buyout costs a little more each month and has no cliff at the end.
Written by
Alex Makowski, Owner
Alex Makowski owns and runs Business Loans for America and has been placing funding for U.S. small businesses since 2021. Businesses he has worked with have secured $50M+ in financing across 1,200+ placements. He writes and reviews every guide on this site.
FAQ
Related questions.
- Can I refinance a lease buyout with a different lender than the lessor?
- Yes, and it is common. The new lender pays the lessor's buyout figure directly and takes a lien on the machine. The lessor has no say in who buys them out.
- What if the lease has already auto-renewed?
- Most renewals allow a buyout during the extension, sometimes at a better figure than before. Ask for the current buyout in writing and refinance from there; the extension payments are the cost of the missed notice, not a permanent state.
- Does a balloon show up in my funding applications?
- A lease payment shows in the statements like any obligation. A balloon does not show until it is paid, which is why a funder sizing an advance will not have priced it — and why paying it with that advance leaves the business shorter than the statements suggested.
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The work is done and the money is real. It is just thirty days away from your account.
Sources
- IRS Publication 946 — How to Depreciate PropertyThe Section 179 deduction and depreciation limits, from the authority that sets them.
- U.S. Small Business Administration — LoansFederal loan programmes, eligibility and what the SBA does and does not guarantee.
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