Grants and Funding
4 Reasons to Lease your Specialty Vehicle
If you think truck leasing is similar to car leasing, it’s time to take a closer look. Here are four reasons why leasing may be a better financial option for your organization:
1. Leasing reduces maintenance and repair expenses. The longer you own a truck, the higher maintenance and repair costs will be. Quicker access to new trucks and technology will reduce your running cost in the later years of a truck’s life cycle.
2. Leasing helps you better focus on your business model. Making a new truck purchase comes with huge up-front costs. In addition, truck owners pay sales tax and finance charges and lose the use of their capital. All these expenditures add up and can be better used to support programs and purchases that directly affect your business model.
3. Leasing doesn’t depreciate. A new truck purchase is a depreciating asset. By contrast, leasing won’t show up on your balance sheet and won’t reduce your organization’s net worth. Leasing can allow companies the opportunity to place an asset in use at lower risk and at a better marginal cash flow.
4.Leasing helps with budgeting and aligning payments. This option is good for municipalities, schools and non-profits that are on an annual payment schedule – Leasing will assist in purchasing higher value equipment without having to have the entire truck’s cost in one year’s budget.
Reasons to Consider Leasing
Leasing provides a lower upfront capital investment and predictable monthly payments. You also can establish what the financing costs are so there will be no surprises.
A lease provides increased visibility into maintenance costs along with greater predictability. The hidden costs can be hard to measure, but they make a difference. Leasing means you’ll have to budget for one less thing.
Leases also free up capital for use in a company’s core business. Many fleets track their leases as operating leases, thus keeping the debt off of the balance sheet.
When the new FASB Lease Accounting Standard goes into effect in 2018, operating leases will no longer be completely off-balance sheet; however, the lease liability will not be considered debt.
The FASB’s Accounting Standards will require lessees to recognize most leases on their balance sheets as leased liabilities with corresponding right-of-use assets. We believes customers will still benefit from an operating lease for all of the traditional reasons, such as:
No residual risk
No obsolescence risk
No effect on debt ratios
Reduction of risk and volatility
Additional Leasing Information
Contact LDV to learn more about leasing a vehicle at 800.558.5986.