RTO Deep Dive: Understanding the Rent-to-Own Process and $1 Buyout Leases

The Easiest Path to Equipment Ownership for Small BusinessesWhen acquiring essential machinery, business owners often face a choice: Rent to minimize risk or Buy to build equity. Rent-to-Own (RTO) financing offers a powerful middle ground, merging the flexibility of a lease with the tangible benefit of eventual ownership.For the small business owner, understanding the RTO process—especially the $1 Buyout structure—is key to strategic equipment acquisition.

The RTO Process: A Step-by-Step Guide

RTO is structured as an operating or capital lease with an explicit purchase option. The process is straightforward:

1. Application: You apply for a lease for the specific equipment (e.g., a Skid Steer or Forklift).
2. Approval & Funding: NLCG structures the payment based on the equipment's cost and your business's cash flow. You pay the first and last month’s payment upfront.
3. Rental Term: You make fixed monthly "rental" payments over the term (e.g., 24, 36, or 48 months).
4. Buyout: When the term ends, you exercise the purchase option, often for a nominal fee like $1. The equipment title transfers fully to your business.

The Power of the $1 Buyout LeaseThe $1 Buyout Lease is the most common RTO structure for businesses that are committed to ownership.

• Tax Advantage: For tax purposes, the IRS typically treats the $1 Buyout as a conditional sale from the beginning. This allows you to claim tax benefits like Section 179 deductions right away, accelerating your savings. This differs significantly from a Fair Market Value (FMV) lease, where the full deduction is typically taken over the term. Consult the IRS’s official guidance on business leasing to determine the precise tax treatment for your specific situation.
• Equity Building: Every payment goes toward building equity, ensuring that when the term ends, the high market value of the equipment is fully realized by your business.

RTO vs. Traditional Loan: A Cash Flow Comparison

While a traditional loan gives you the title immediately, it often demands a large down payment (10–20%).

Internal NLCG Analysis shows that RTO’s low upfront cost is a major benefit for businesses prioritizing cash flow. This low barrier to entry minimizes risk, allowing your business to generate revenue with the equipment before fully committing to the purchase. The flexibility and ease of use of the RTO structure make it a favorite for new businesses.

Ready to Secure Your RTO? Take the Next Step

• Path 1: Start Your RTO Application Now (Best)Get a financing commitment that aligns with your ownership goals in under 4 hours.APPLY HERE: Fast Online Application
• Path 2: Speak with a SpecialistDiscuss RTO vs. loan structures with an NLCG specialist.CALL NOW: 1 (858) 345-6338
• Path 3: General InquiryHave a basic question about repayment terms or collateral requirements.Visit Our Contact Page