Semi Truck Finance – What Structure Is Right For You?
Determining the right structure to finance your truck starts with what you plan to do with the truck or how much use your truck will get. Do you plan on owning your truck or trading it in?
If your plan is to own your truck outright then a loan or capital lease might be what you are looking for. If you are not covering a lot of ground or your truck is not getting a lot of use then these options make sense. However, if your plan is to own the truck and run it into the ground, that might initially save you some money until it breaks down and you have to cover the costs to repair it.
The benefits of a loan would be that you are not locked into a term. As opposed to a lease, you would be able to pay off your loan early without prepayment penalties. This gives you the flexibility to pay off and sell your truck at any time. A loan would be seen on your books as a liability, or a debt, and you would be allowed to only write off the interest expense each year in addition to your depreciation.
The benefits of an operating lease would be that you would be able to write off the entire monthly payment of your truck as opposed to just the interest expense. You would also be allowed to keep this debt off of your books as a liability as it would be considered a rental. In addition, you would also be allowed to accelerate the depreciation of your truck over the term of the lease. Depending on the term of your lease and the tax allowances for that particular year, this may or may not be an additional benefit to you.
Give us a call at Integrity Financial Groups today at: 801-386-8222.