A $1 buyout lease is a lease in name and a purchase in substance. You pay the full cost of the equipment plus a financing charge over the term, then take ownership for a single dollar.
Payments are higher than on a fair market value lease for the same equipment, but there is no uncertain buyout at the end. It fits equipment you plan to keep for years, such as kitchen equipment, vehicles or production machinery.
Example: 36 payments of $1,450 on a $45,000 machine total $52,200. Add the $1 buyout, and the financing costs you $7,201.
Compare it with an equipment loan on the same equipment. Tax and accounting treatment can differ between the 2, so check with your accountant.