Lease Purchase good or bad?

[TRUCKNMAMA]

My owner made us an offer yesterday on a lease purchase. They said we can get a 2001 T2000
They would take 15 % of Truck income. We are now getting 60% and pay fuel & tolls all the rest they pay. I don't know what the going rate is. I do know of one person taking 25%. Does this seem fair or not. We do not have good credit and have been refused by credit Co's before.
I need help before I do anything. I will wait for your input. Thanks

 

[Wild Bill]

It really depends on the situation. How old is the truck? What kind of shape is it in? How long would you have to give them 15%? And the biggie..Do you want to be owners or are you happy with being a driver? Those all have a bearing on the answer.

 

[RichM]

Will you be locked in and how long will the lease be? Sounds good from what you said,I know a guy who leases E unit tractors and wants 25 % of the revenue so 15 % sounds good to me,You should try to negoiate a escape clause in case something happens that you can no longer drive etc.Good luck

 

[Troadgirl]

The main things you must remember in any potential lease or purchase option are:

1 cost of the money? (how much interest or "money factor") is needed to do the deeal?

2 The price and its negotiable properties.

3 the residual value of the item(truck) what will it be worth at the end of your finance or lease period?

4 can I get credit somewhere even if it is at 12% or high and can I handle that cost.

5 Re-establishing your credit is key to future buisness propositions, how long will you wait to get it done. Since signing on with a "private" lender or creditor may not effect your credit rating in a positive way. since reporting to credit agencies is only done through financial institutions.

6. Can you, based on you leagal structure of operating (sole proprietor, LLC, S-copr or corp)is it best for you tax wise. [tlak to your accountant]

Just food for thought.

 

[Steven]

Your best bet is always to try to purchase yourself. As to the 15%,that is what we also charge and that is usually less than the depreciation you will get to take on your income taxes aside from the benefit of your interest paid on the loan. One thing you might want to inquire about is if there is a balloon after a certain time and if you are locked in for a specific time also. You might also want to ask if you can contact someone that has a contract with them now. Good luck.