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Lease pro's and con's

Discussion in 'Business Fundamentals' started by NoFearDeere, Dec 5, 2005.

  1. NoFearDeere

    NoFearDeere PlowSite.com Addict
    Messages: 1,715

    I was just wondering what everyone's opinion is on leasing new vehicles. I have toyed with the idea of leasing; for example: 05 2500HD 6.0L Ext.cab SB LT. Around $425.00 pr. month. What does everyone think? :confused:
     
  2. crazymike

    crazymike Senior Member
    from Toronto
    Messages: 639

    depending on your lease conditions, a plow could violate them.

    You should plan on buying the vehicle back.
     
  3. SnoFarmer

    SnoFarmer PlowSite Fanatic
    from N,E. MN
    Messages: 8,592

    NO no no.:waving: ... unless your some big corp you are wasting your money leasing.:nod:
    If you lease you do not have an asset, when your lease is over you have nothing. now if you were buying it, the payments are about the same or less,
    you can depreciate it on your taxes and when you done paying for it you will have something to show for it.
     
  4. PipeGuy

    PipeGuy Junior Member
    Messages: 21

    I began to wonder about this myself after seeing a comment in another thread by someone who keeps trucks 3yrs or 36K miles and then trades them in. It's not exactly the same question as yours but it might be closely related so - what benefit is gained by rolling over trucks that quickly?
     
  5. NEPSJay

    NEPSJay Senior Member
    Messages: 270

    It was benifical for me to lease for tax purposes as my company is incorporated. Everyones situation is different. Thats the kind of question you should ask your bookkeeper or accountant. They will be able to tell you whats best for you. hope this helps........Jason
     
  6. NEPSJay

    NEPSJay Senior Member
    Messages: 270

    P.S. .........I have a LEASED 05 2500hd w/ plow prep and no it doesnt void warranty or void lease contract. Maybe through a small local bank it might be against lease, but not through GMAC.
     
  7. SnoFarmer

    SnoFarmer PlowSite Fanatic
    from N,E. MN
    Messages: 8,592

    If he was buying the trucks he has an asset to trade in,
    (as the truck has value) Newer trucks need less maintenance and they have warranty's, so he does not have this expense of maintaining an older vehicle.
    It's not a good Idea for a young guy to lease a new truck. Some times they can't really afford a loan for a new truck but someone will lease him one.
    so, they think hey I'll lease it, it will cost him more in lease payments and to pay over millage fee and any damage to the vehicle. And as I stated before when the lease it over you have nothing!! It will be cheaper to get a loan from the bank.
     
  8. NoFearDeere

    NoFearDeere PlowSite.com Addict
    Messages: 1,715

    The one I looked at said the following: $425.00 per month, at lease end pay $1500 or so and it's mine, and no mileage fee until after 60,000 miles then it's 0.15 per mile. ???? I don't know much about leasing, what would happen if I traded in at say 35,000 miles??
     
  9. jglandscaping

    jglandscaping Senior Member
    Messages: 271

    Never seen lease terms like that. Mine is $372/month. That includes them doing oil changes and tire rotations. My truck is a 05 GMC sierra 2500HD ext cab SLE, fully loaded. I put 3k down, have it for 12k/year and pay .20 over mileage(trucks gonna have to sit for awhile cause I didnt predict all the driving Id do this year:realmad:, oh well) The dont care if you are under mileage, you dont get anything back. I think you are looking at a Comtrac lease where you lease for (x) amount of time and either buy it back for $1 or 10%(may be different depending on bank). Leasing is nice because its easier to write off and you get a new vehicle every couple years, with a new warrenty. For the price youd pay for a new truck, say finance for 5 years, you could lease 2 vehicles for 6 years, with cheaper monthly payments and have them both covered underwarrenty....just some quick info.
    Thanks
    James
     
  10. PSDF350

    PSDF350 Senior Member
    Messages: 577

    I have leased 2 new trucks never ever again. Last time when done I got @@@@ed with no vasaline and it hurt. Close to 6k in over miles and some dings. Buying is the only way I will ever go again.
     
  11. TEX

    TEX Senior Member
    Messages: 606

    Lease

    THE BIGGEST THING ABOUT A LEASE IS THE MILEAGE, IF YOU DONT DRIVE MORE THAN 12-15K PER YEAR YOUR OK. PLUS SIDE YOUR TRUCK IS ALWAYS NEW(NEW TRUCK EVERY 2-3 YRS), ALWAYS COVERED UNDER WARENTRY, AND YOU ONLY PAY FOR THE PART OF THE TRUCK THAT YOU USE. THATS HOW THEY FIGURE THE LEASE PAYMENT-- WHAT WILL IT BE WORTH WHEN YOU TURN IT IN. SO IF YOUR LOOKING AT A 1 TON GAS VS 1 TON DIESEL FOR EX.. A 1 TON GAS WITH 36K MILES WILL BE WORTH LESS THAN A 1 TON DIESEL WITH 36K MILES. YES THE DIESEL COST ABOUT $5K MORE BUT YOUR NOT BUYING THE WHOLE $5K JUST THE PART YOU USE DURING THE LEASE.

    SnoFarmer
    now if you were buying it, the payments are about the same or less,

    UNLESS YOU PUT DOWN A LOT MORE MONEY NO WAY OR IF YOUR LOOKING AT A LEASE FOR 2YRS AT 8K MILES A YEAR VS A BUY FOR 72-84 MONTHS AT 2% INTREST.

    AND IF YOU DO LEASE YOU KNOW HOW MANY MILES YOU ARE ALOWED PER YEAR- IF YOU GO OVER ITS NOT THERE FAULT THAT YOU BROKE THE TERMS
     
  12. HLS Wholesale

    HLS Wholesale Senior Member
    Messages: 111

    NEPSJAY -

    Can you please tell me what being incorporated has to do with whether leasing is the proper financing method? I also fail to see any tax advantage whatsoever in a lease as opposed to a purchase. This is a favorite line used by the lease sharks, but there is no fact in it whatsoever. In fact, purchasing provides better tax advantages because of section 179.
     
  13. NEPSJay

    NEPSJay Senior Member
    Messages: 270

    Im not an accountant, so i dont know the answer to that. I pay for a CPA for book purposes. Im not sure, it was explained to me but i've slept since then. Maybe it has something to with state taxes?? I have to call them today and ask now that u got me thinking.
     
  14. LwnmwrMan22

    LwnmwrMan22 PlowSite Fanatic
    Messages: 27,999

    The deal with leasing, if I remember right, is that you can deduct the whole payment. Meaning each year, you have 12 payments of say, $500, so you have a $6,000 tax write off. It's not that you get MORE of a tax deduction, it's just easier to figure it out.

    With financing, you have to depreciate. You yourself can determine how you depreciate. With the tax laws now, some people can depreciate the entire cost of that truck the first year, or have a $40,000 tax write off.

    If you depreciate it out over a period of however long you're financing for, then you're still going to get the same tax benefits, but it's harder to figure out.

    My accountant has said that you should always depreciate something out however you plan on paying for it.

    If you've paid cash for something, take as much of the depreciation you can the first year.

    If you're financing, depreciate it out over a period of however long you're financing, that way you're getting the tax benefits the entire time.

    As for the payments, yes, buying you'll pay more in a monthly payment, but you have something at the end.

    Leasing, just like an apartment, you have nothing at the end, and are going to have a hard time getting your damage deposit back.

    I leased a truck one time, ended up paying $3k in overmileage fees. Chalk me up to another person that'll never lease again.

    About the point of turning trucks over every 3 years, once you're on top of the game, and have worked your butt off to get the first one paid off, it's not that expensive to get a new truck every 3 years.

    This year I traded a 2002 Dodge 2500 CTD, with 60k miles on it, on a new 2005 Dodge 2500 CTD for $12k difference. You finance the 12k over 3 years, and it's $4k / year, or just under $350 / month. With Dodge's 7 year / 70k mile warranty, the truck always stays under warranty, and it's a BUY payment about the same as a lease.

    Again, you have to work your butt off to get that first one paid off in 3 years, which is about $12-14k / year, but after that, it's a piece of cake.

    I've got a 2005 and a 2003 this way. Next year the 2003 is up for trade again.