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.
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.
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.
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.