Tokai Financial Services, Inc. brought suit against Randy P. Carter for monies owed under Carter’s guaranty of a telephone equipment lease agreement. The trial court granted summary judgment to Tokai, and Carter appeals.

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   On January 3, 1996, Tokai’s predecessor in interest, Mitel Financial, entered into a ‘‘Master Equipment Lease Agreement’’ (Agreement) with Applied Radiological Control, Inc. (ARC) for the lease of certain telephone equipment valued at $42,000. Carter personally guaranteed ARC’s obligations under the Agreement. ARC made four rental payments and then defaulted on its obligations as of June 1, 1996. Thereafter, Tokai repossessed the telephone equipment and sold it for $5,900. * * * Tokai then brought this suit against Carter, and the trial court awarded Tokai $56,765.74.

  1. In his first enumeration of error, Carter contends the Agreement is a ‘‘finance agreement’’ rather than a true lease. * * *

   As an initial matter, we note that Paragraph 13 of the Agreement states that each lease contemplated therein is a finance lease as defined by Article 2A of the UCC. ‘‘A ‘finance lease’ involves three parties—the lessee/business, the finance lessor, and the equipment supplier. The lessee/business selects the equipment and negotiates particularized modifications with the equipment supplier. Instead of purchasing the equipment from the supplier, the lessee/business has a finance lessor purchase the selected equipment, and then leases the equipment from the finance lessor.’’ [Citation.]

   Carter contends, nonetheless, that the true intent of the parties was to enter into a security agreement. ‘‘Whether a transaction creates a lease or security interest is determined by the facts of each case; however, a transaction creates a security interest if the consideration the lessee is to pay the lessor for the right to possession and use of the goods is an obligation for the term of the lease not subject to termination by the lessee, and (a) [t]he original term of the lease is equal to or greater than the remaining economic life of the goods, (b) [t]he lessee is bound to renew the lease for the remaining economic life of the goods or is bound to become the owner of the goods, (c) [t]he lessee has an option to renew the lease for the remaining economic life of the goods for no additional consideration or nominal additional consideration upon compliance with the lease agreement, or (d) [t]he lessee has an option to become the owner of the goods for no additional consideration or nominal additional consideration upon compliance with the lease agreement.’’ [UCC]1–201(37).

   Here, the Agreement’s initial term was for five years, ARC was not required to renew the lease or purchase the telephone equipment at the end of the term, and ARC did not have the option to renew the lease or purchase the property at the end of the term for nominal consideration. Therefore, the Agreement does not fit within the definition of a secured transaction provided by [UCC]1–201(37).

   Furthermore, ‘‘it is commonly held that the ‘best test’ for determining the intent of an agreement which provides for an option to buy is a comparison of the option price with the market value of the equipment at the time the option is to be exercised. Such a comparison shows whether the lessee is paying actual value acquiring the property at a substantially lower price. * * * If, upon compliance with the terms of the ‘lease,’ the lessee has an option to become the owner of the property for no additional or for a nominal consideration, the lease is deemed to be intended for security. [Citations.] ARC was given the option to purchase the telephone equipment in this case at the end of the lease term for its fair market value. ‘‘Additional consideration is not nominal if * * * when the option to become the owner of the goods is granted to the lessee the price is stated to be the fair market value of the goods determined at the time the option is to be performed.’’ [UCC §1–201(37)(x).] Accordingly, the agreement in this case must be considered a true lease, not a secured transaction. As a result, the procedural safeguards of Article 9 of the UCC are inapplicable to the matter at hand, and Carter’s claims under this enumeration must fail. [Citations.]

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   ‘‘In Georgia, all lease contracts for ‘goods,’ including finance leases, first made or first effective on or after July 1, 1993, are governed by Article 2A of the Uniform Commercial Code.’’ [Citations.] The Agreement was entered into by the parties on January 3, 1996; therefore, it is subject to Article 2A of the UCC. * * *

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   Judgment reversed.