Is it better to purchase a vehicle or lease it? This is an age old question similar to the chicken and the egg…. Depending on your individual business situation, there are benefits to both. Most people believe that putting high mileage on a vehicle automatically knocks leasing off the table; or maybe they are upfitting the vehicle and think that modifying a unit will make it ineligible. Or better yet a customer wants to own the vehicle at the end of the lease term but is worried about a large buyout or residual payment and is turned off. The truth is, commercial leasing has been transformed into a customer friendly, business oriented option that customers at Safford Chrysler Jeep Dodge of Fredericksburg should consider when adding a vehicle to their fleet.
TRAC leases are a great way to accommodate high mileage usage with off the books financing freeing up capital and alleviating the stress that often comes with a standard retail lease (I know, I’m in a lease now and am already over my miles LOL). TRAC leases are a flexible, affordable way to get the vehicle you need without the worry of excess wear and tear or mileage penalties at the end of the term. TRAC leases can be structured with various terms and residuals including a ZERO TRAC option with a $1 final buyout and can even accommodate most upfits as well. Another added benefit to a lease is a smaller monthly payment that can even sometimes include maintenance or a warranty depending on the lease structure.
But enough about leases, let us move onto the benefits of a standard purchase with a regular loan structure. For those customers that keep vehicles for a long time or have a need to depreciate an asset for tax purposes or otherwise don’t fit into a lease option, a standard vehicle purchase may make the most sense. Commercial loans work exactly like a retail loan varying typically only in interest rate (commercial tends to be higher) or term (most companies don’t finance for 84 months) with the exception of the capped cost associated with upfits or modifications. Some upfits such as refrigeration packages tend to be an exception as they become a permanent part of the vehicle and can sometimes be financed 100% in the right credit situation. Other upfits or modifications such as luxury conversions may be maxed at 50% due to their limited permanency (i.e. easily removed electronics).
Buying vs. Leasing: Which One’s Best for You?
Standard commercial loans however, are not all the same and there is some flexibility in structure. A company with seasonal business or influx of income such as a landscaper or pool maintenance company may be interested in a loan with skip payments where their loan allows for a break during the off season. Another commercial option is a loan with accelerated payments that can offer the client an opportunity to include a large amount of negative equity due to trade or vehicle loss or to pay off the loan faster in a structured manner based on their income stream and company flux. And with no prepayment penalties companies still have the option to pay a loan off early if they choose to do so. You can apply for financing at Safford Chrysler Jeep Dodge of Fredericksburg with our convenient online finance application.
Every business and every customer has their own unique situation and should always rely on the advice and expertise of their accountants to make sure they choose the best option for them but there are options out there and maybe some you should consider the next time you are in the market. For more information about leasing or purchasing your next vehicle, contact Michelle Hughes at Safford Chrysler Jeep Dodge of Fredericksburg at (540) 898-7200.