Straight Purchase
This method of acquiring a vehicle entails the buyer paying for the vehicle outright at delivery. This could involve a loan from a bank of the buyer’s choice or funds directly from the buyer.
Straight Lease
- Also called “walkaway lease” or “traditional lease”
- Typical term is 60 months (but can be different)
- At end of term, customer returns car back to dealer in good condition and has no further responsibility (car must be within mileage and condition limits set forth in agreement)
- Customer is only paying for a “portion” of the car; at lease end, the car still has “life” (value) left and can be sold again; therefore, customer enjoys lower payments during the term because he/she is not paying for 100% of the vehicle
- 100% of the lease payments can be expensed – written against your taxes
- Oftentimes, lease rates are a little better than a straight purchase rate because under leasing laws, the bank can depreciate the car as an asset and can therefore give a more attractive lease rate
- Customer cannot depreciate the car since it is not an asset on the customer’s books
- Ideally, this works well when a customer does not want to keep the car for an extended amount of time (wants to keep more current body style vehicles)
Lease-Purchase
- Also called “dollar buyout” lease
- Typical term is 60 months (but can be different)
- At end of term, the customer owns the car 100%
- This is virtually identical to financing the car through a local bank
- Customer is paying for the entire full value of the car over the term, so the payments are higher than a straight lease (but customer will own the car at the end)
- Customer is able to depreciate the vehicle as an asset on the company’s books
- Payments cannot be expensed because the car is an asset on the company’s books
- Typically, these rates are a little higher than a straight lease because the bank cannot depreciate the car as an asset since the car
- Ideally, this works well when a customer wants to keep the car for many years
Trac Lease
- Typical term is 60 months (but can be different)
- At end of term, the customer owns the car 100%, but also guarantees to pay a pre-determined residual amount
- This lease is helpful when the customer wants lower payments than a straight purchase but also wants to own the car at lease end
- The customer must fully understand that the agreed upon residual amount is his / her responsibility to pay to the dealer at lease end – this is not optional
- The customer can dictate the payment amount by how much he / she agrees to pay at lease end…the higher the end payment, the lower the monthly payment during the lease term
- BE CAREFUL about some companies offering you “too-good-to-be-true” lease payments…CHECK YOUR PAPERWORK CAREFULLY…there is probably a guaranteed payment at the end of which you may be unaware
- Trac leases are useful tools when the customer is AWARE it is a trac lease…some unscrupulous dealers have used this type of lease unbeknownst to the funeral home to beat other dealer’s pricing – KNOW what you are signing!
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hields really understands the business of owning high-dollar equipment and knows the importance of procuring rolling stock in a fiscally-wise manner. There are several financial means by which a firm can acquire a hearse or limousine and the consultants at Shields can guide you through the pros and cons of these various options. 
