Fire Truck Financing: Getting around the turn-in lease

How do you get the benefits of a fire apparatus trade-in or turn-in lease without the problems?
This article will help you answer that question. The apparent benefits of a turn-in lease is easy - you get new apparatus every few years. But this financing method is expensive and has some drawbacks.

What is a turn-in or trade-in lease?
It's a financial contract allowing you to use the vehicle for so many years. Then, you are forced to take some action - buy the apparatus, sell the apparatus, or turn-in or trade-in and get a new apparatus.

The payment amounts are usually based upon a 9 1/2 year financing term. The manufacturer has run the numbers and knows that the apparatus (subject to the stringent conditions you agree to in the contract) will have a value at or above the balance on the lease. It's not a fluke that 9 1/2 years is chosen for the payment amounts. They know there will be equity in the apparatus when it's traded in. Or, if you've not kept the truck in the condition you warranty in the contract, they'll charge you enough to cover their investment.

So, how can you get the best of both worlds?
A simple traditional 10 or 11 year lease purchase agreement gives you the same payments and options as a trade-in or turn-in lease. It will also provide more flexibility in the future so you are not forced to make decisions as conditions have changed since you bought the apparatus.

1. Your payments will be about the same. The payment should actually be a little lower for a 10 year term.
2. If you want to get rid of the truck in 5 or 7 years, you can sell it at your convenience and keep the equity you would have lost had you turned in the apparatus.
3. Or, if it makes sense at the time, you can keep the truck at the same payments. You are not forced to make a decision at an inopportune time.
4. You are not forced (as with the trade-in leases) to keep buying apparatus from the same manufacturer.

In Summary
Turn-in and trade-in leases have some glitz that wear thin as you examine the details closely. It's easy to have the same apparent benefits and have more flexibility and options in using and disposing of your apparatus.

I've written some articles about these type of sophisticated financing contracts. You can find them here:

Fire Truck Turn-In Leases - The Key Factors to Consider

Fire Truck Walk-Away Leases - How They Work


Stay safe!

John R. Hill
Apparatus Budgeting Consultant
ENVIZION Financial
www.envizionfire.com