How an Auto Lease Is Valued

Leased vehicles are quite popular these days. However, there have been many arguments as to whether a lease constitutes an asset or a liability. A lease is an asset in the sense that the lessee can use the equipment. It is a liability in the sense that there is a contractual obligation to make the lease payments.

One other thing to consider is that there is a difference between a true lease and a lease purchase. In a true lease, at the expiration of the lease term, the equipment is returned to the owner. But in a lease purchase, at the end of the lease, the equipment will be handed over to the lessee. One way to identify a lease purchase is how much the lessee has to pay at the end of the lease term to get the title to the equipment. If it is a low amount like $1 or $10, then it is likely that you’re dealing with a lease purchase. If buying the equipment at the end involves a larger amount, such as $5,000, it can be said that a purchase was not the primary intent of the arrangement.

Generally, a true lease is not considered in the marital estate. This is simply because the value of the asset is offset by its liability, which is the obligation to make lease payments.

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