Global Financial & Leasing Services (GFLS) recently rolled out a program for leasing titled commercial vehicles. From work trucks, boom trucks and tank trucks to tractor/transport trucks and more, now you can finance a lease for a titled vehicle* with us.
Like our other financing programs for businesses, we offer financing for commercial vehicle leases for those with B- and C-tier credit and startups, so even if you have less-than-perfect credit, been turned down for financing at the dealership or starting a new business, it’s possible to get your financing with us. GFLS is known for, “When other lenders say no, we often say yes.”
We believe that credit blemishes shouldn’t keep business owners from financing titled commercial vehicles. Leasing commercial trucks for work can help generate revenue, from winning more contracts to providing more service. Many businesses can grow with the right commercial vehicle in their fleet, so we help business owners get the equipment they need without making a sizeable investment in purchasing or qualifying for traditional financing from big banks.
Choose the Right Type of Lease for Your Business: Operating or Capital
If financing your commercial vehicle lease is the best way to supply your company with the truck or fleet it needs to operate and grow, then you should understand the types of leases available and how they affect your business.
While there are two types of commercial leases, the one you choose has consequences for your business expenses and tax situation. It’s important to understand the differences between them so you can choose the best fit for your business.
An operating lease is considered an expense to the lessee – the one who is leasing – you. The lessee has no ownership stake in the commercial vehicle(s). Instead, you are making your payment each month for the benefit of using them for your business. The titled commercial vehicle(s) is/are the property of the leasing agent or lessor (us). The advantage to you is that because the commercial vehicle(s) is/are leased, the payment is treated as a regular operating expense, and therefore doesn’t pass to your balance sheet. Since the vehicle isn’t considered an asset, you’re not responsible for taxes on it.
Choosing a capital lease means the lessee (you) assumes a portion of the ownership of the titled commercial vehicle(s). The title(s) is/are still held by the lessor (us), but because there is joint ownership, the lessee (you) can claim depreciation and interest expense from your payments on your taxes. Unlike with an operating lease, the vehicle(s) with a capital lease is/are not considered an operating expense. The vehicle is recorded on your balance sheet as an asset because it is owned and a liability because of the payments.
LEARN MORE: Frequently Asked Questions About Commercial Vehicle Leasing
(Link this to the other blog for this month.)
Be Aware of When an Operating Lease is a Capital Lease in the Eyes of the IRS
It’s tempting for business owners to go with an operating lease when financing a commercial vehicle so that the vehicle is an expense, not an asset. However, the operating lease cannot meet four conditions. Otherwise, the IRS will deem it a capital lease instead. These four conditions are:
- The life of the lease cannot exceed 75% of the asset life.
- There cannot be a transfer of ownership to the lessee (you).
- There cannot be a “bargain price” option at the end of the lease.
- The current lease payments cannot exceed 90% of the vehicle’s fair market value.
Ready to Finance a Lease on a Commercial Vehicle?
Choosing an operating or capital lease when financing your commercial vehicle(s) comes down to what makes sense for your business. Talk to us if you have questions. Or when you’re ready to work with a dealership, start the application process.
*GFLS does not finance leases for semi-trucks used for interstate hauling.
