Planning Ahead for End of the Leasing Period
Truckers face a variety of options when their truck lease is approaching its end. The best option depends on their specific situation, including their financial status, truck condition, and future business plans. If the truck has been properly maintained and has equity, most would prefer to pay off the lease. It’s essential to have a plan well in advance of the lease end date. The following are some of the most common options for truckers whose lease is coming to an end.
“It’s critical to have a plan in place well before the end of the lease.”
Renew the Lease
Truckers can renew their lease with the leasing company if they are satisfied with the truck and lease terms. This choice can be useful if the trucker wants to keep predictable monthly payments and avoid the expenses of purchasing a new truck. However, be aware that the leasing company may not want to renew or extend the lease due to the truck’s age and mileage. So, it’s essential to review all available options.
Return the Truck
If the trucker no longer needs the truck or can’t afford to buy it, they can return it to the leasing company at the end of the lease term. This option may come with early termination fees or penalties if the truck is not in good condition or has exceeded the mileage limits specified in the lease agreement. Some leasing companies offer maintenance programs while leasing their trucks.
Buyout the Lease
If the trucker wants to keep the truck, they can buy out the lease. This involves paying the residual value of the truck, which is the estimated value of the truck at the end of the lease term. This option can be beneficial if the trucker wants to own the truck outright and avoid monthly lease payments. However, buying out the lease requires upfront cash or financing to cover the purchase price of the truck. First Capital Business Finance offers financing options for both good and bad credit business owners. Within a few simple minutes you can be prequalified. Call and speak with one of our advisors at 888-565-6692.
Refinance the Lease
Truckers can renegotiate the lease terms with the leasing company by refinancing the lease. Sometimes it might not be that simple, you should always ask your leasing company about the ability to refinance the lease from the very beginning. They might not even offer this as an option, and it would be good to know this when making plans at the end of your lease. Refinancing the lease can be beneficial if the trucker wants to extend the lease term, reduce the monthly payments, or adjust the mileage limits. Refinancing may also be an option if the trucker wants to buy out the lease but needs more time to secure financing. Be proactive, and make sure you plan ahead! If you plan on refinancing the lease, this can take a little longer. You don’t want to do this at the last minute, and risk losing the truck. If the truck is older, has higher miles, or needing maintenance the leasing company may not want to extend the lease. There’s a higher chance of repairs or costly maintenance they might not want to cover during the remainder of the new lease. This is where a company like ours might be able to offer other solutions. First Capital Business Finance offers multiple programs for lease buyouts that provide a longer term with affordable payments to pay off the truck. This is a great solution for someone who wants to keep the equity they’ve paid into the truck and keep it. To view our programs, visit our website or call 888-565-6692.
Trade-In the Truck
If the trucker wants to upgrade to a newer or better truck, they can trade in the current truck to the leasing company or then can even try contacting a truck dealership to compare the offers. When trading in the truck means the leasing company or dealer will take ownership of the truck and apply its value towards the purchase of a new truck. Depending on the equity in your truck, you might have a balance or credit on the trade in. This option can be beneficial if the trucker wants to maintain a steady flow of income but needs a newer or better truck to meet the demands of their business. If there is no equity left, the trucker will be required to cover the balance if they won’t finance the difference in the new lease. We have found most trucks have some equity if they have been paying on time, for the last several years. It is recommended that you ask for the payoff and the breakdown of any other fees associated with the lease. This will get you a good idea on the equity of the truck by pulling up some recent sales online.
Consider Your Options Carefully
It’s important for truckers/business owners to carefully consider the pros and cons of each option and consult with a trusted advisor or accountant to make the best decision for their trucking business. But more importantly, don’t wait till the last minute! It’s critical to have a plan in place well before the end of the lease. If financing the buyout is necessary, it may take some time, so planning ahead is vital.
We have had clients reach out to us the day before the lease was up, and as you may know that isn’t ideal for a smooth transaction. If you have any questions about our financing options, you can speak to one of our friendly advisors at 888-565-6692. If you prefer not to speak on the phone, you can use our online Help Desk and chat with one of our online advisors. Our Help Desk does also offer after hours support, if you are not able to do this during typical business hours.
