Whether your line of business deals with farming, construction or other area that depends on the use of heavy commercial vehicles such as dump trucks, a great deal of your profit and reputation depends on having your vehicles and equipment in top operating condition. When your commercial vehicles and equipment are in non-operating condition or cannot handle the jobs necessary this means a loss in profit for your business. This could also mean taking hard hits as far as your company’s reputation among customers and cliental.
Just because the need to purchase new or used dump trucks and other large commercial vehicles presents itself does not mean that this type of financing is always within your company’s budget. That is why it is good to know there are reputable financing and leasing companies who can help you obtain the funding necessary to purchase these vehicles. By simply filling out an online application, many of these financing companies are able to give you a decision on your financing and leasing requests within just a matter of moments.
Just like traditional loans and leasing programs that are set up to purchase personal automobiles, the requirements and conditions of obtaining leasing and financing for a commercial vehicle are strict. Many financing companies are more willing to approve lending and leasing for commercial vehicle needs due to the extraordinary amount of collateral value associated with these types of vehicles. For example, the value of a personal automobile begins to depreciate the second that you move it off of the seller’s lot. With commercial vehicles, you can operate them for years without the value taking a huge hit. This is because the value of a commercial vehicle is averaged by the amount of work they can do even after several years of being in use.
There are a lot of benefits from both financing and leasing options for commercial vehicles for your company. The key is to find the one that is the most beneficial for your needs. With a financing option, you are just borrowing the money to purchase your dump truck or other commercial equipment. The financing payments are usually pretty structured as far as how they are paid back. With purchasing your vehicle you will need to claim the vehicle as an asset for your business but can claim the depreciation value as a liability.
When you want to lease a dump truck or commercial equipment for your business there are two main types of leasing options that are available. The first option is an Operating Lease and is commonly referred to as an off-balance sheet liability. This means that you do not claim the vehicle or equipment as an asset to the business. However, when filing the taxes for your business you can deduct the lease payments that you make on the vehicle or equipment as an operating cost. When your leasing period is up most leasing companies will allow you the option to purchase the vehicle at a fair market value. Most of the Operating Leases that are available have lower lease payments and fewer restrictions when applying.
The second main type of leasing option is a Capital lease. This type of lease is most beneficial for the person who is just starting their own business or who plans on having the vehicle for a long period of time. With this type of leasing option you would need to categorize the vehicle or equipment as a long term liability but could deduct the interest that is paid on the vehicle as an expense to the company. While most capital lease payments are a little higher when your leasing period is up you are given the opportunity to purchase the vehicle for a very minimal amount of money. Most leasing companies ask that you pay $1 to 10 percent of the market value of the vehicle.
There is no right or wrong option for financing your new dump truck. It just depends on the best option for your business in the long run. So fill out your financing application today and put yourself in the driver’s seat of that new tow truck.
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