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Lease vs loan

Mike L

Mike L

Senior Member
Joined
Dec 1, 2010
Messages
1,928
Location
Texas
Occupation
Self employed field mechanic
In the next 12 months I’m planning on upgrading service trucks. my current truck doesn’t have much depreciation left and most of the interest on the loan is paid and I’m going to need a write off. Interest rates suck. My credit is excellent but I haven’t found a bank that offers commercial loans with a rate lower than 8% And then they want anywhere from 10-20% down. The other option is a lease which I know almost nothing about but I understand that if I can find a leasing company that they actually buy the truck and lease it to me for a monthly payment and then I make one final payment at the end which is a purchase payment. if I understood it correctly the complete lease payment is tax deductible. Is this all correct? Where do I find a leasing company and what else do I need to know about leases? what are the down sides?
 
O

ozarkag

Well-Known Member
Joined
Apr 25, 2018
Messages
247
Location
ozarks
From the little I know about leasing the buyout option "one final payment" might be close to market value of the truck at that point. ?

But I'd be happy with the truck you're running!

Oh, and as you go to get a dream truck let us share some of the fun. LOTS of good ideas and "have to haves" sure to come forth. . .
 
Junkyard

Junkyard

Senior Member
Joined
Jun 5, 2016
Messages
3,637
Location
Claremore, OK
Occupation
Field Mechanic
Almost every part of a lease is negotiable with the right lender. Residual value, mileage per year etc. If they throw something at you and their stance is “take it or leave it” then leave it. Yes in most situations a lease payment is 100% deductible.

Back in the farm days we’d lease a pickup with crazy high mileage per year, super low residual but it came with a hefty lease payment. We didn’t care as we could have paid cash. We made the payments and bought out the lease at the end, truck didn’t have near the miles we estimated and one of us ended up with a nice personal truck for pennies on the dollar since the lease rate was figured on tons of miles in a short term.

The good lenders know how and why businesses use them and usually will taylor a lease to a specific need. I will say it’s been a number of years since I’ve even inquired about one so I wouldn’t take my info as experience as gospel lol.
 
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