First Class

Fall 2012

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Lease or buy? And if leasing is the answer, from whom? Neil Vonnahme, the president of PACCAR Leasing (PacLease), readily admits there is no single solution that will fit any com- pany in need of equipment. "Every company has different equipment needs, different levels of debt, different levels of equity," says Vonnahme. "So the first step, clearly, is to look at your company's specific circumstances and determine whether leasing or buying best meets your needs for new equipment. "If leasing turns out to be the right answer for you, PacLease is extremely well-equipped to customize a leasing solution and put the best in new trucking technologies at your disposal." Step one Vonnahme advises any company with new equipment needs to start by considering five questions. They are: • What is the best use of your company's capital? "Customers are looking for ways to best leverage their bor- rowing power and equity to get the best possible return on their investment," says Vonnahme. "Lease 'accounting treatment' could improve their financial picture." • Is transportation your core competency? "Your time might be better spent on the business you do, rather than learning how to run a trucking operation," says Vonnahme. "Maintenance, roadside service, fuel tax reporting — these are just a few of the administrative concerns that could be passed onto a leasing company, instead of having to become an expert on them yourself." • Do you know the real cost of ownership? "The real cost of maintenance might surprise some trucking operations. And market dynamics could be affecting your resale values without you even knowing it. Leasing can help you lock in, forecast and prepare for both your maintenance costs and residual values of your equipment." • What information is necessary to make a lease/own comparison? "PacLease has lease/buy calculation tools that can help you make decisions with your fleet, and here's what will be considered. On the ownership side, start with the price of the equipment; interest rate; length of asset life; corporate tax rate; expected maintenance costs; administrative costs; and net pres- ent value calculation of payments, financing and maintenance," he says. "Compare that to the lease variables which are the fixed lease rate; the mileage rate; the length of lease; the net present value calculation of the lease rate; and the residual responsibility (yours or the lessor's?)." • What are the real and perceived benefits of ownership and leasing? "Truck ownership might not be the answer in terms of giving Leased equipment may provide better customization, ROI Questions and Answers about Leasing Q & A 12 l FIRST CLASS

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