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  • Lease vs. Purchase

    I am looking for some info on the pro's and con's for lease vs. purchase of a new apparatus. Anyone got any good links that I could do some research. Not haveing much luck in my search.

    Thanks gang!

  • #2
    Research with your manufacturer. They will be able to tell you the in and outs of their programs better than someone else.
    RK
    cell #901-494-9437

    Management is making sure things are done right. Leadership is doing the right thing. The fire service needs alot more leaders and a lot less managers.

    "Everyone goes home" is the mantra for the pussification of the modern, American fire service.


    Comments made are my own. They do not represent the official position or opinion of the Fire Department or the City for which I am employed. In fact, they are normally exactly the opposite.

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    • #3
      Having sat in on a session with two manufacturers over lease versus buy it can look good on the outside but the inside is something totally different. Talk is cheap since it is what's on the paper contract that becomes binding. You have to look real close at the contract for the lease to figure out the real deal. In our case the numbers just did not add up and with penalties for various things it just wasn't cost effective. In the end after I showed the chiefs the final costing of lease versus buy they went with the buying of the units. Also their is a break point for trade in purposes if you want to get into new rigs instead of keeping them for a lengthy time where the unit becomes worth less than half of a new one for trade. In the end I think it is what you can work out with the manufacturer or dealer that will determine what you decide. Just, please, make sure the paperwork(contract) is a good and reasonable one before signing on the dotted line.

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      • #4
        Leasing is just another way of financing your purchase. If you qualify for municipal rates you can get a better rate for a municipal lease than a purchase. (The leasing company/bank gets special incentives and passes them on to you in the rate.)

        We are doing leases on our last two purchases and feel perfectly comfortable with it. It's still a $0.00 buyout so it's not like there's a balloon payment that has to be paid off or refinanced. That can be set for 10 or 15 years if that's what you figure your life cycle will be.

        If you have any questions call Laurel Mountain Leasing. That's who did ours and they've also done some financing for me at work when municipalities want to lease their vehicle purchase.

        http://www.laurelmtleasing.com/
        Steve Dragon
        FFII, Fire Instructor II, Fire Officer I, Fire Appartus Driver Operator Certified
        Volunteers are never "off duty".
        http://www.bufd7.org

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        • #5
          Research ALL angles

          You have to weight your options when you try and determine which way to go: leasing or purchasing.

          If your department is fairly inactive, say under 2000 calls a year, then leasing probably isn't the way to go. If its very active, say about 2000 calls a year, and specifically that truck is going to be first-due, then maybe leasing is something that you want to look at.

          Here's basically a break down:
          1. Most annual leasing rates (again it varies between manufacturer) will be roughly TWICE the cost for a ten year lease-purchase (or bond) for example. So this becomes advantageous when the amount of wear you put on the truck (usage) is high enough that you do not want to own the truck because of the usage and potential maintenance issues associated with it.
          2. So if you don't want to own the truck, and you are basically running it into the dirt, then you are planning on getting rid of it say 7 years later, then leasing is the way to go since you are planning on getting another one at the end of the lease, and you don't necessarily care about the value of the truck at the end of the lease agreement.
          3. On the other hand, if you don't run a lot of calls, and don't put a lot of wear and tear on the truck, then paying twice as much in lease payments does NOT make sense - you would rather buy the truck outright so you own it.
          4. If you lease purchase it (or bond it) you (essentially and it will vary) decrease your annual payments in half. Also, at the end of the lease purchase term, you OWN the truck - you have equity in it, and if you don't use it alot, chances are its going to be worth some good $$$, so you can turn it back in as a down payment on a new lease purchase for another truck! Essentially you are doing the same thing as a lease, but you own the truck and you do NOT loose that equity.
          5. A significant difference between leasing and lease purchase is the lack of a service plan. If you lease the truck, the manufacturer still owns it and so they are responsible for maintenance (which is why its so attractive if your department is ridiculously active). But, most manufacturers also will sell maintainence agreements - and these are relatively cheap adn can be added into the lease purchase agreement as part of the total charge.


          It all comes down to the demographics of your department - how active you are and what roll that truck will play firematically.

          I hope that helps.

          Regards,

          Richard M. Spackmann
          Fire Commissioner
          Greenfield Fire District
          http://www.RichardSpackmann.com

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          • #6
            almost forgot...

            I believe there is some law in FDIC where banks have to have a certain percentage available to municipalities in their local vicinity - at least that's how banks in NYS work.

            So most banks have a "fund" where if you are a municipality you can tap into it and get interest rates MUCH lower than leasing companies can give you or truck manufacturers themselves.

            If you go with the lease purchase (or bond) look into this option. Even if I'm wrong in assuming this is not an FDIC thing - still talk to your local banks and shop around - see what kind of deals they can give you. Do NOT necessarily restrict yourself to the leasing company the manufacturer tells you to use.

            Regards,

            Richard M. Spackmann
            Fire Commissioner
            Greenfield Fire District
            http://www.RichardSpackmann.com

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