One more thing!
Make sure, that truck has a fair market value, lease companies are famous for inflating the price! Negotiate it the same as a purchase! 8)

 

I didn't get your message until late last night, or early this morning. If it sounds a bit strange, I was sleepy.

I don't know anything about this company you mentioned. Leasing can help preserve some working capital and is usually not listed as a liability on your balance sheet where as a loan is considered a liability. I don't see any great tax advantages to leasing, at least to someone starting out. You can depreciate a truck and write the interest expense off so it can be just as much of an advantage as leasing, from a tax point of view. Also, the last 2 or 3 years, I believe, the laws have changed to aid smaller business to purchase more equipment. You could write the entire cost off the first year, if you choose to do it. I don't know if that will be available this year or not, but it was a year to year thing the President initiated to help purchase equipment up to a certain dollar amount. I believe it was under $200,000.

As I noted in my response to your pm, if I were you I would take $20,000 out of the $30,000 and pay cash for a truck. That will still leave you with $10,000 to operate on or use as an emergency fund. You won't have any monthly payments to make and can save a lot of money on interest. Most lenders require borrowers to pay a down payment of around 20-30% of the purchase price. If you lease some require 10%, first and last or first, second and last payments. It depends on the leasing company. It is a great feeling to have a piece of equipment paid off. It gives you flexibility to sit if you can't get a decent rate. It is the guys who have the big payments who seem to find the need to run for $0.85-$0.90/mile just to keep the wolves at bay.

If you pay cash and put the equivalent of a monthly payment each month, you can upgrade to the truck you want in a year or two and not have to worry about payments. Consider it a business decision. It is too easy to let the emotions control our decision making process. The idea is to make money. You will make more money with a paid off truck than if you make payments.

 

I agree, Dejanh. I don't think writing a piece of equipment is best for everyone, but could be an advantage for some. It won't be an issue for most just starting out.

 

I read something in the lessors e-mail that kinda bothered me.
" you will be able to save your cash for operating fees and repairs down the road".....something like that. If you lease a vehicle isn't it their responsibility to provide maintenance? We are leased to a company but we pay to lease a trailor from them. We do drop and hook, so we always have a different trailor, but we pay a set rate monthly.ALL OF WHICH IS TAX DEDUCTIBLE. They pay for all maintenance on this unit. Would it not be the same as when a company leases a small fleet from i.e. Penske. Penske is responsible for all maintenance for these units. SO if you lease a truck from them they should maintain it.

 

It depends on the company and what is stated in the lease. Some carriers do their own maintenance to save money. Trailers can be a different animal. Some will include maintenance in the agreement. Xtralease is one that provides all maintenance, including tires. If the tire needs to be replace due to the driver, then the carrier pays for the damage. This can include things such as damage due to curbing the tire or bending a wheel. I know of some fleets that lease their trucks but have their own maintenance people.

 

first let me start off by saying I don`t lease a truck...


but with a good finance rate i`d go for it every time as i`d rather have my money in the bank making me money instead of paying cash for equipment and it losing value, now I prefer older trucks so the 3 me and my wife have combined are paid off but 2 of our 4 current trailers are being financed along with alot of equipment I bought for a shop.

a quick example would be my two latest purchases, an old marmon I found while picking up my 07 EAST, instead of laying out 45k and owning them outright I left that money in a 5.9%cd and finance the 45k at 0% interest, I do this because I have a ton of business credit which if you look into is insanely easy and quick to build, so the 45k I owe bounces around on credit cards that offer anywhere from 30 to 90 days same as cash while I make payments every month on whichever card i`m using and in the event that something does happen to me i`ve still got the actual cash in the bank to pay off all debts owed.



next week we`ll discuss corporate credit cards that give you 5% back on business purchases, think fuel

 

Which American Express Card do you use, Dejanh?