Wednesday, December 30, 2009

Fire Truck Leasing: Who is a turn-in or walk-away lease good for?

We talked about all the essential items to consider in last week's article about selecting a turn-in or walk-away lease.

After all those issues, is there anyone that should use a turn-in or walk-away lease for their new fire truck?
The answer is yes. But it's a select audience and we'll discuss the characteristics where these types of sophisticated financial contracts work well.

A turn-in or walk-away lease is perfect for those departments who meet these criteria:
  1. Have a formal replacement program that replaces their fire trucks every 5 or 7 years.
  2. Have the financial and budgetary discipline to set aside monies to buy their truck every 5 or 7 years.
  3. Are OK with the concept that they never really own the vehicle yet are responsible for it.
  4. Has a maintenance program that will care for the trucks exactly according to the operating requirements of the manufacturer (including mileage and pump use).
  5. Is 100% sure they will continue to buy from the same manufacturer (after all, the reason that manufacturers offer these plans are to keep you buying from them).
  6. Are not worried or concerned that can afford to buy or will qualify to borrow money on used trucks if the decision is made to buy rather than turn-in or walk-away.
For 99% of the departments out there, these offers rarely make sense. For the 1% who can answer "Yes" to the above (including your political and financial people). For the others, these offers will end up showing a lack of understanding of their commitment and will become very expensive.

Stay safe!

John R. Hill
Apparatus Budgeting Consultant
ENVIZION Financial

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