Spray Foam Equipment - Spray Rigs, Foam Insulation

Leasing News Flash

The New Economic Stimulus Package has recently increased the Tax Benefits Under IRS # 179 for Spray Foam Insulation Contractors for your equipment, Foam Trailers and Spray Foam Trucks .

Now Spray Foam Contractors can deduct up to $ 250,000.00 this year 2008. Using $ 1.00 Buy Out or Conditional Sales Agreement type Lease.

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Leasing versus Buying -- Which is Right for You?

The idea of leasing new and used trucks is not new. Granted the concept has been around longer in the car industry, but it has continued to gain popularity within the truck industry.

Lease it? Buy it? What's the difference? It's easy to confuse the two. That's why it's important to recognize the differences. To help you sort out the specifics, the following is an outline of some of the advantages and disadvantages between buying and leasing.

What is leasing?
Leasing is very similar to renting. You pay for the use of a truck that is not actually yours. When the lease is up (usually 36 to 60 months), you don't own the truck, you return it. However, you can elect to purchase the truck at a predetermined price (called the "residual value") rather than return it. The residual value of the truck is set and agreed upon in the original lease documents.

What does it mean to take out a loan on a truck?
Taking out a loan means that you are financing the truck over a period of time. A loan requires the buyer to make equal monthly payments over a predetermined period of time (usually 36 to 60 months). The monthly payment includes principal and interest and when the loan is paid off, you own the truck.

What are the advantages of leasing?

Typically the monthly payment is lower since your lease payments are only covering the cost of the trucks depreciation and not going towards the purchase price.
In many cases, you do not have to come up with a large capital investment/down payment when leasing. However, by applying a down payment, the monthly lease payment is reduced.
Unlike car leases, truck leases do not have mileage or wear and tear penalties.
When the lease is up, you can either return the truck to the leasing company or buy the truck back at its residual value.
Some companies choose to lease because they find it to their benefit not to have the debt hit their balance sheet. Please seek advice from your accountant regarding this issue.
Potentially, there may be tax advantages to leasing. Because tax situations vary widely, it is recommended that you consult an accountant to determine whether or not you may realize any potential tax advantages.

What are the advantages of buying?

Monthly payments are applied to the actual purchase of the vehicle. Thus, you are building equity in your truck with each payment. Once the loan is paid off, you own the truck.
As a business, when you buy you can deduct the depreciation of the truck on your tax return. It is advised that you pursue guidance from your accountant regarding this issue.
A down payment is not always required. However most buyers do choose to make a down payment in order to reduce their monthly payment.
Once your loan is paid off, you own the truck. You no longer have monthly payments to deal with and it's your decision whether or not you want to sell the truck tomorrow or keep it for another 5 years.

What are the disadvantages of buying?

In some cases, when you take out a loan to buy, the monthly payments can potentially be higher for the same truck when compared to a lease payment.
Financing a truck is a long-term commitment. Anytime you buy a vehicle whether it is a truck or a car, the vehicle typically starts to lose value the minute you drive it off the lot. And as a general rule, it is difficult to trade a truck (or a car for that matter) if you have not made the bulk of your payments. Why? As you make your monthly payments, you are building equity in the vehicle by paying down the principal. Some finance contracts are designed to where you pay more interest per payment in the early years and more principal per payment in the latter years. Consequently, if you try to trade in the early stages of your finance contract there is a high probability that you will not have enough equity in your truck to make it a favorable deal for you.
What's right for you? Obviously there are many questions that you will need to answer. After all, it all depends on you and your business. You'll need to decide what makes sense for your situation.