ss_blog_claim=bd50edc517cf0b7549fe6b5f63b6b5f8 The SLS Business Finance Blog: TRAC Leases for Cars and Other Transportation

Sunday, November 9, 2008

TRAC Leases for Cars and Other Transportation

The most common lease type for the company car or other transportation is known as a TRAC lease. TRAC stands for Terminal Rental Adjustment Clause. What it means is that the Price can (but does not have to be) be adjusted at the end of the lease term. For instance, a car is leased for 36 months and the pre-negotiated residual value/buyout price is $15,000. Well one type of TRAC lease allows for re-negotiation at the end of term based on factors like usage and miles so the buyout price can rise for fall. This is similar to how most consumer
carleases work and its known as an Open Ended TRAC lease.

The other main type is a Closed Ended TRAC lease. This is when there is no renegotiation at the end of the term. It's used in transportation as well but is more common for other equipment types. The most common type for cars and other transportation is the Open Ended TRAC lease. All the benefits of leasing still remain like full tax deductibility, purchase option at the end so you can choose to buy the car or return it, and reasonable monthly payments.

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donald said...

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Stu Lustman said...

Thanks for your feedbck Betty. I'm glad you like it.