Lease In Trucking – Learn The Nuts and Bolts Of This Terminology

November 19, 2015/0 Comments

If you are new to the trucking business, then terms like lease might seem a little confusing. It is a fee that everyone has to pay in order to use someone else’s equipment. The length of the leasing agreement could vary from months to even years, depending on the requirement.

Leases can offer great flexibility to the business. When the lease is being structured, the borrowing party (the lessee) is provided with different options. You must consult your manager to learn the suitable option for your requirements.

Lease In Trucking – Learn The Nuts and Bolts Of This Terminology

Popular deposit structures include:

  • Simple deposit
  • Traditional security deposit

Traditional security deposit is often used to minimize the risk of any transaction made. It can be determined as 10% of equipment cost. If you are looking for the most affordable deposit option, then this traditional deposit seems quite beneficial.

The simple deposit, on the other hand, is also a convenient structure. This kind of deposit is directly applied to the first and last payments. Hence, it reduces the number of payments on lease amount. If you are looking for the least costly option, then give serious thought to the simple deposit.

There are different types of payment options:

  • Level payment
  • Deferred payment option
  • Seasonal payment
  • Step payment

The level payment includes unchanging and predetermined amounts paid at fixed intervals of time. The best thing about this option is that payments will never increase during the course of time. The clients can conveniently forecast future expenditures and plan accordingly, so this is the most convenient payment option.

Learn More About the Deferred Payment Options

Deferred payments include lease payments which are deferred for a specific amount of time. The time interval could vary from 30 to 90 days from the day the lease started. With this option, experienced semi -truck financing companies let you take the equipment on a lease and generate revenue before your business begins making payments for its use.

What is the Seasonal Payment Option?

The payments are billed on seasonal schedule in the seasonal payment options. This payment option is designed appropriately to suit the slow and hot periods of a seasonal business. This is an ideal payment option for all those companies that are involved in farming or other similar industries.

Check Out the Common End-of-term Options

Once the lease period is over, you will be provided a few end-of-term options like renewing the lease, returning and re-leasing, returning and canceling and so on. If you do not require the equipment once the lease is over, then you can cancel the lease and return the equipment.

If you are not ready to replace the equipment, you can continue with the same equipment by choosing to renew the lease. They will not impose any penalties if you keep the equipment past the initial lease term but you should make sure that you notify your account manager that you wish to renew the lease. The return and re-lease option will allow you to return the old equipment and shop for new equipment.


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