Types of Equipment | Vehicle Leasing and Fleet Services | Types of Leases | Quote / Application | Partners

Prospective Clients | Lenders

Types of Leases

There are many types of leases. Four of the most popular are:

Operating (or True Tax) Lease
- term is shorter than expected useful life of equipment
- at end of lease, equipment is returned to lessor or can be purchased at Fair Market Value
- lease payments are expensed, the asset and liability is not added to your company’s balance sheet

TRAC (Terminal Rental Adjustment Clause) Lease:
- for qualified titled motor vehicles and trailers
- term is shorter than expected useful life of equipment
- lease payments are expensed, the asset and liability is not added to your company’s balance sheet

First Amendment Lease:
- designed for equipment with shorter useful life
- lease payments are generally expensed for tax purposes, depends on asset life
- at end of term, lessee can either purchase equipment or renew lease

Capital Lease
- ownership of equipment is automatically transferred to lessee at end of the lease term
- includes bargain purchase option (typically $1.00)
- treated as a loan for accounting purposes
- lessee is also treated as owner for tax depreciation purposes