jnorrie said:
I just moved 3 months ago from car sales to the tree bus., and leasing is definately the way to go. you are only usually paying for half of the gear (residual value), and in turn your payments are less. for example...
You are looking at a 94000 dollar bucket truck, over five years with a competitive 6.25% apr, it comes out to roughly 1664.58 a month plus tax...
or you do the lease...
with a 48% residual value, on a 3 year lease... (Note- shorter payment period...) with nothing down and the same apr... your payments are 1331.66 a month. note that you are paying less over a shorter period. In this case it works out, but that is not always the norm. here's the kicker...
at the end of the lease you have 3 choices: 1) you turn it in with no further obligation. 2) you trade it in for newer and better or 3) you can sell it or buy it for the remainder owed. in this case it would be roughly 48000 owed... but your payments dont change drastically from that 1331.66 a month, so you can still be comfortable. any other questions email me.
james
Again, if you're gonna be buying a 94,000 dollar truck, you need to talk to an accountant. I am sure as heck not one, but lets look at the example as layed out above.
Let's
assume, sole proprietor in 30% tax bracket, assume $48000 to be the 3 year value in both cases
3 year lease
Your biz deducts........................................$ 47,939.76
Your biz expends.......................................$47,939.76
actual deduct savings................................$14,381.92
..............................................................
- ____________
net expenditure........................................ ..$ 33,557.84
$$ needed to purchase..............................$ 48,000.00
Net equity in truck........................................$...........0.00
..............................................................
+ __________
Total net expenditure to own......................$ 81,557.84
3 year purchase
Your biz deducts........................................$ 67,680.00
Your biz expends.......................................$59.924.00
actual deduct savings ...............................$20,304.00
..............................................................
- ____________
net expenditure...................................... ...$ 39, 620.00
$$ needed to purchase.............................$ 39, 949.52
Net equity in truck....................................
- $ 8, 050.48
..............................................................
+ __________
Total net expenditure to own......................$71,519.00
Full Disclosure I only stayed at a Holiday Inn last week, and yes I am sure this is not a 100% example, so talk to your CPA and have him explain it to you..............:biggrinbounce2: