What Is Fair Market Value (FMV)?
FMV, as it applies to the purchase option in a lease, is the dollar amount that your equipment can be sold for on the market at the end of your lease. Because market conditions change over time, this dollar amount is unpredictable today. FMV is usually chosen as a purchase option by those businesses that want the lowest monthly payment possible and are fairly certain that they will return the equipment and upgrade at the end of the lease.
“Fair Market Value” (FMV) is the price at which a property would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or to sell and both having reasonable knowledge of relevant facts. Fair Market Value is a term in both law and accounting that is based on the economics term of “market value.” It is also a common basis for assessing damages to be awarded for the loss of or damage to property, generally in a claim under tort or a contract of insurance. Fair Market Value is a judgment established by market research of similar vehicles (a.k.a. “comp”) in a specific market region during a given time frame. The goal is to determine at what price the subject vehicle would have sold for at a specific time in a given geographical area. Auto Damage Experts employs various recognizable and reliable resources in locating comparable vehicles to effectively ascertain a vehicle’s true Fair Market Value regardless of how unique the property may be. ADE
