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#162832 - 04/25/07 11:18 PM Survey: to lease or not to lease your work van  
TheGreatSparkalini  Offline
New Member
Joined: Aug 2005
Posts: 4
Sanford, Maine USA
Its getting time to consider a business vehicle perchase/lease. Would like to discover what would be best in general. To open up a can of worms; I thought I would ask the wealth of experience available here some questions.
1. How does a work vehicle affect Image and can it be quantfied in dollars and cents?
2. How many contractors out there lease vehicles and what are the advantages vs the pitfalls.
3. If usage makes a difference for lease vs buying used....what would be the best for a small contractor doing 10 to 15 k total miles a year (no major city work).

I appreciate your responses. Thanks


Business, Office, Estimating, Legal:

#162835 - 04/25/07 11:48 PM Re: Survey: to lease or not to lease your work van [Re: TheGreatSparkalini]  
RDK  Offline
Member
Joined: Apr 2007
Posts: 33
Lac LA Biche
Lease is 100% write off


#162855 - 04/26/07 08:59 AM Re: Survey: to lease or not to lease your work van [Re: TheGreatSparkalini]  
stevecheyenne  Offline
Member
Joined: Nov 2006
Posts: 38
Yorba Linda, CA
Originally Posted by TheGreatSparkalini

1. How does a work vehicle affect Image and can it be quantfied in dollars and cents?


I believe a clean and reliable truck will help convince a customer that you do clean and reliable work. I don't know how I would quantify it, but I have been in discussions where customers have told me they would never hire a guy who would drive a truck and keep his tools "like that". I don't believe fancy new trucks are required, but they should be clean and organized.

And they absolutely, positively, have to get you to the job on time, every time.

The opposite is also true. We often work alongside a plumbing contractor who drives a Mercedes. That car comes up in conversation far to often to believe that no one notices it and thinks they are being overcharged. He bought the car used for not much more than the cost of a good pickup but it doesn't matter. The very sight of it on the job irritates people.

Quote
2. How many contractors out there lease vehicles and what are the advantages vs the pitfalls.


I buy my trucks a couple of years old and run them until it costs more to fix them than the payments on a new one, or they deteriorate to the point that they are a visual liability. I typically buy a 2 or 3 year old truck with less than 50K miles on it for about 1/2 what the truck would cost new. Given that we run 1 ton pickups with utility bodies and the body alone is about $8K I get my best value that way. I've been trading them at about 150K - 200K miles and it's nice to see that American trucks are lasting that long these days.

I have a couple of problems with lease vehicles. The first is that they are nearly always new and depreciation eats you alive. The second is that you are guaranteed to have a truck payment forever and nothing to show for it at the end. Leases are set up to benefit the leasing company, not you.

Quote
3. If usage makes a difference for lease vs buying used....what would be the best for a small contractor doing 10 to 15 k total miles a year (no major city work).


By California standards you don't drive much and your annual mileage would be within the range acceptable to most lease companies. The problem however, is that the truck has to look like brand new when you turn it in and if you're working out of it, it won't. Look for hefty charges for dings and dents at the end of the lease period.

The tax writeoff thing can be useful, but on a purchased truck you can write off the entire purchase the first year - I don't think you can do that with a lease. Talk to your tax guy - there are limits to how much you can write off (with my used trucks it has been 100%) the limit changes and it may not even be possible any more, but that is how I have been doing it.

At 10K miles per year, you might consider a sub $10K hi mile (100K?) van (I assume you use vans in Maine) to get you the best bang for your buck. Buy it for $10K, write it all off the first year, put 75K miles on it in 5 years and junk it for $1000 at the end.

You'll be paying something like $7K (depends on your tax structure) for 5 years and 50-75K miles. That's less than the depreciation on a new truck the day you drive it off the lot.


Last edited by stevecheyenne; 04/26/07 09:07 AM.

#162871 - 04/26/07 02:03 PM Re: Survey: to lease or not to lease your work van [Re: stevecheyenne]  
ITO  Offline
Member
Joined: Nov 2006
Posts: 348
Texas
Everything stevecheyenne said, only I buy new trucks and sell them for $1000 (or less) at 200K miles to my employees.


101° Rx = + /_\

#162882 - 04/26/07 05:01 PM Re: Survey: to lease or not to lease your work van [Re: ITO]  
mahlere  Offline
Member
Joined: Nov 2005
Posts: 507
New Jersey
track leasing is the best option if you can do it..best of both worlds...


#162906 - 04/27/07 09:39 AM Re: Survey: to lease or not to lease your work van [Re: mahlere]  
stevecheyenne  Offline
Member
Joined: Nov 2006
Posts: 38
Yorba Linda, CA
What is track leasing?


#162909 - 04/27/07 12:46 PM Re: Survey: to lease or not to lease your work van [Re: stevecheyenne]  
earlydean  Offline
Member
Joined: Dec 2003
Posts: 751
Griswold, CT, USA
I googled it and found:

1) leasing of a RR track
2) leasing of a race track
3) fast track leasing for Ryder trucks (fleets)


Earl

#162911 - 04/27/07 02:36 PM Re: Survey: to lease or not to lease your work van [Re: TheGreatSparkalini]  
Dnkldorf  Offline
Member
Joined: Dec 2004
Posts: 1,064
nowhere usa
trac=terminal rental adjustment clause


#162915 - 04/27/07 04:45 PM Re: Survey: to lease or not to lease your work van [Re: Dnkldorf]  
mahlere  Offline
Member
Joined: Nov 2005
Posts: 507
New Jersey
Trac Leasing allows the tax advantages of a lease, with the benefits of a purchase.

Quick info on trac leasing

Whenever we can use trac leasing (not all manufacturers do it - Sprinters didn't a while back, don't know about now) We do a $1 buyout. $0 down, truck pays for itself from day 1.


#162918 - 04/27/07 05:13 PM Re: Survey: to lease or not to lease your work van [Re: Dnkldorf]  
Dnkldorf  Offline
Member
Joined: Dec 2004
Posts: 1,064
nowhere usa
This is an interesting find:

An open-end lease usually has a short minimum term (one year), then continues on a month-to-month basis until the lessee terminates. Most open-end leases contain what is known as a TRAC clause (Terminal Rental Adjustment Clause). The TRAC clause provides that when the vehicle is turned in and sold by the lessor, if the proceeds from the sale exceed a value determined at lease inception, the lessee gets the excess. If the proceeds are less, the lessee must pay the difference. Most open-end leases do not contain mileage or wear-and-tear penalties, and often contain a “step-down” payment schedule, wherein payments decline annually.

Found here:http://www.fleet-central.com/af/t_remarketing.cfm?fromsite=af&action=articles_pick&storyID=1071&remarketing=1


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