How can commercial truck leasing companies be beneficial to your transportation business? We find that commercial truck leasing companies can be beneficial in many different ways. Financing commercial trailers can benefit your company garnered by writing off the monthly stream of payments against your income on an annual basis. Many people find that financing their commercial truck or commercial trailer helps to lower their total tax responsibilities at the end of the year.
Commercial truck leasing companies can assist to better fit the programs that can fit your business’ needs. One of the reasons that people finance is to capture depreciation value on an annual basis to benefit your company’s cash flow and tax liabilities at the end of each year. When a truck or trailer is financed, the purchaser automatically assumes any depreciation on equipment and is allowed at the end of the year to write off only a portion of the depreciation in hopes retrieving some of the monetary loss. When a commercial truck or commercial trailer is leased, the burden of depreciation falls on the lessor and the lessee never sees the monetary loss caused by depreciation.
Commercial trucks and commercial trailers can be financed OR leased. The major difference between financing and leasing is realized in the tax benefits at the end of the year. When a truck or trailer is financed, your balance sheet reflects that you are in debt at the end of the year. One of the benefits of leasing is that on your financial statements you would only show the total lease payment on your financial statement. For example, if you were to finance a $40,000 truck, your statements would reflect $40,000 debt. On the other hand, with a lease, your financial statement would indicate only your monthly payment as a debt. Showing a lower debt to income ratio is very beneficial for transportation companies, as it may allow your company to obtain even more financial support when needed. Many leasing companies offer a Lease/Purchase option. This option is beneficial for your transportation company because throughout the term your balance sheets reflect only the monthly debt, and you retain ownership of the vehicle at the end of the term for just a dollar. Another reason that commercial truck leasing is beneficial to your company is the tax deduction, which is the same every year, keeping your budget simple. In most cases, lessees are able to write off the entire monthly payments made on their leased commercial vehicles, which is a substantial benefit to transportation companies.
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