Cash, Lease or Loan

At ST Capital, our clients are not required to utilize our financing services in order to take advantage of our purchasing power and fleet management tools. With that said, ST Capital can focus on delivering unbiased advice to our clients.

Choosing the proper purchasing method is not always straightforward. In fact, some business people carry the misconception that one purchasing method is always better than another. In reality, the optimal purchase method can only be determined after looking at a lease vs. buy analysis of a common vehicle in your fleet. ST Capital welcomes the opportunity to provide you with a lease vs. buy analysis based upon your own financial criteria.

Purchase with Cash

The least popular way to acquire company vehicles. With the preservation of working capital being a top priority for a business, most companies determine that their use of "cash" will generate higher rate of return when invested in their core business such as new products, employees or inventory. There are unique circumstances though when it might make sense for a company to purchase with cash. One example may be a mature company with a surplus of cash in a mature low growth industry with limited investment opportunities.

Purchase with Lease

The most popular type of business vehicle lease is the open-end (trac) lease.

Open-End Lease (TRAC)

The open-end lease is the most popular way for companies to purchase vehicles. An open-end lease gives the lessee the ability to participate in the profit or loss resulting from the sale of the leased vehicle. Simply put, if the amount recovered on the sale of the vehicle is greater than the vehicle's remaining lease balance, the lessee is credited that excess. If the selling price is less than the remaining lease balance, the lessee is charged the difference. This process is applied whether the vehicle is turned in before or after its anticipated period of usage. There are no mileage penalties or "ordinary wear and tear" fees, nor are there any penalties for early termination.

Purchase with Loan

While a loan is very similar to the open-end lease, there are a few reasons why a company may prefer a loan versus lease. For example, a traditional loan may have a lower implied interest rate compared to lease. Or, a traditional loan may provide favorable depreciation deduction tax shields compared to a lease lowering a company's tax exposure..

Interested in learning more about our purchasing power? Get a price of a common vehicle in your fleet today.