Before You Lease

Commercial vehicle leasing is not the same as leasing a vehicle from a local auto dealer and for a very good reason. Business owners often pay excessive amounts of money to the dealer when they return the car or truck at the end of the lease.

Unless your lease is structured as a commercial lease, you will end up with a standard consumer lease full of restrictions and penalties that are sure to cost you plenty upon returning the vehicle.

Commercial TRAC Leasing

Terminal Rental Adjustment Clause (TRAC) leases were created specifically for commercial business use by the Accounting Standards Board (FASB) in 1976. Please consult with your CPA before entering into any commercial lease or finance agreement because he or she will be able to advise you on how to structure the terms.

Advantages of the TRAC lease over the consumer lease for a business vehicle are well worth the time to compare before you sign. Advantages include:

  • Unlimited Mileage - the consumer lease is restrictive and costly if you exceed the fixed number of miles in your contract.

  • Lower Monthly Payments

  • Off Balance Sheet Financing - company books will not reflect a vehicle loan/debt.

  • No Excessive Wear And Tear - no penalty fees are charged for dents and dings which are expected while using a vehicle for business use.

  • No Down Payment

  • Tax Lease Benefits - 1) Operating lease payments are expensed as rental payments, 2) Financial or Capital lease appears on the company books as a loan and depreciation is taken as opposed to expensing rental payments.

  • Monthly payment is determined in part, on the difference between the vehicle cost and the residual. For example, if the vehicle cost is $75,000 and the residual is set up front at $25,000, then $50,000 is used in the payment calculation, not the full $75,000.

Call Us Today!

Learn How A TRAC Lease Can Work For You

936-436-1110

 

Residual Planning

Just as important as obtaining the best rate for your lease, setting the proper residual amount will help to eliminate writing a check when the vehicle is sold. The residual amount should be based on an analysis of how the vehicle will be used.

Hidden Charges

Unfortunately we have some "bad apples" in our industry who believe that surprising you with additional charges is an acceptable practice. At 6-h Fleet Leasing it is what it is and we refuse to hide anything!

Before you sign any lease contract or order vehicles, please be sure to understand exactly what you will be paying. Even if you do not lease from us, we want to make sure you understand your contract. Give us a call, we would love to help.

Sales Taxes

There is no such thing as a free lunch, and it applies in the vehicle leasing business too. Most states have a sales tax and some require the tax to be paid up front. Some states determine the tax on your monthly payment.

 

Not understanding your tax liability and how it affects your lease contract is another way for an expensive surprise to come up when you take delivery of your vehicles.