Posts by cosmicotter12

If you ask me—and honestly, plenty of my individual clients feel the same way—leasing just isn't worth it for regular people... at the end of the day, whether you go with a lease or just take out a standard loan is entirely up to you and your own math.

Under the current leasing law, there’s actually no such thing as gaining ownership outright...

According to the leasing law NN 12/06, Article 5, "The business of operating leases is defined as a legal transaction where the lessee pays the lessor a specific fee during the term of use, which doesn't necessarily have to reflect the total value of the asset; the lessor handles all depreciation costs, and the lessee doesn't have a guaranteed purchase option, though usage can be terminated under certain conditions."

Every single leasing company has its own set of fine print (you know, those tiny little details hidden in the contract), so my best advice is to actually read them... At the firm where I work, the client actually has the right to hand-pick a new buyer for the asset, which could be a spouse, a parent, a kid, a sibling, or even a business entity (like a local dealership that buys the car back from the leasing company and then sells it back to you for a nominal fee).

And look, you can't just claim one type of Leasing is better than the rest, or say one setup is strictly for small businesses while the other is for big corporations... it's not that simple.

Picking the right kind of Leasing really just comes down to what you're actually trying to pull off in the end. You’ve gotta weigh all the factors like sales tax, your depreciation costs, and who actually holds the title at the end of the day.

Plus, there's this huge distinction between taking out a loan and going with Leasing... one major thing is that Leasing doesn't even show up as a debt on your credit profile the way a standard loan does.

OPERATIONAL Leasing

So, with Operational Leasing, the Leasing company is gonna ask you for a security deposit upfront, and once the contract finally wraps up, you get that money back... usually they’re looking at about 20% as a deposit, though if you're pushing the limits on an operational deal, they might demand up to 33%...

As for the sales tax, it just gets written off monthly through your installments, and since the vehicle technically stays on the Leasing company's books as a long-term asset, you don't get to claim depreciation on it...

You also have to hammer out the buyout value at the start of the deal, which can range anywhere from roughly 20% to 80% depending on what kind of deal you can swing with the Leasing firm...
Usually, those higher buyout percentages are reserved for dealership inventory or showroom models...

The big thing to remember is that once an operational lease ends, the person who was using the car doesn't actually get to own it...

There are basically three ways this plays out (though it really depends on which Leasing company you're dealing with):
- you can just hand the keys back to the Leasing company and let them deal with selling it...
- you can go out and hunt for a new buyer yourself, and then sell it to them at whatever price—higher, lower, or even equal to—the Leasing company is asking for...
basically just playing middleman...
- or you find a new buyer, that new guy buys the car directly from the Leasing company, and then he turns around and sells it to you...
which sounds like a massive headache...

And with those last two options, there's always a bunch of different scenarios regarding that security deposit, like whether you actually want them to cut you a check for it or not...

FINANCIAL Leasing (FedEx)

When you're dealing with FedEx, they usually look for a down payment somewhere between 20% and 30%, though it really depends on what kind of gear you're picking up—whether it’s brand new or some used equipment... basically, the more cash you throw down upfront, the lower your monthly payments are gonna be. And honestly, there isn't really a cap on how much you can put down if you want to keep those installments low...

If you're running a corporation, the leasing company hands over an R1 form so you can write off the sales tax immediately, but if you're just operating as a small business or a sole proprietorship, you'll have to write off that sales tax bit by bit through your monthly payments...
The asset being financed gets rolled into your long-term assets, which means you get to claim depreciation on it too...

Once you wrap up the FedEx term, you just gotta cough up about $160 or $333 a buyout fee, and then boom, the whole thing is yours...

Look, I work in Leasing, so you can take that to the bank... it's 100% solid.

If you want, I can sit down later and break down the actual differences between operating and capital leases for you...

When you're dealing with financial Leasing, it doesn't matter if you're just an individual or running a whole corporation, once that final payment hits, you've still got to cough up this extra buyout fee... it usually runs about $165 or maybe even $333 depending on which big outfit like Chase or Wells Fargo you're signed with. You really need to dig through your contract because they’re legally required to lay it all out there.

Now, if you're looking at operating leases, the deal is totally different because the lessee isn't actually going to own the car at the end of the day... instead, they have to—or can choose to—designate some third party to buy the vehicle from the Leasing company, and then that person buys it from them. It's a bit more of a headache to navigate, but honestly, it's doable if you play your cards right.