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TRAC Leases vs Finance Leases

Equipment leasing and financing are both great options when it comes to supplying your fleet with top-notch, up-to-date trucking equipment and machinery.

There are various types of leasing options on the market, but the most common are TRAC leases and Finance leases, which are also known as Dollar Buy-out leases. In this blog, we'll dive into the characteristics of both TRAC leases and Dollar Buy-Out leases to help you understand which leasing option would be best for your fleet.

TRAC Leases

Terminal Rental Adjustment Clause, also known as TRAC leases, has unique features that can be beneficial to the owner. The carrier that is leasing the equipment can potentially receive tax benefits by writing off all their monthly payments as a business expense.

When it comes to monthly payments, TRAC leases are typically lower than most, but a one-time, residual payment is required at the end of the lease. This payment can either be refinanced or paid out in full. 

Dollar Buy-out Leases

On the other hand, finance leases are a ‘lease-to-own’ option. The leasing company still owns the equipment, but the carrier can also potentially receive tax benefits on the depreciation of the equipment and deduct interest expense.

Dollar buy-out leases will have a higher monthly payment, but at the end of the lease, the one-time residual payment is only $1.00! 

Which Leasing Option Is Best?

Both leasing options are budget-friendly and follow the ‘Islamic’ financing guidelines by not noting the interest rests on the documents. And with both of these options, the carrier is still required to be responsible for maintenance and repairs of the equipment for the term of the lease.

At Aladdin, we offer both TRAC and Dollar buy-out leasing options and assign a dedicated account executive to each client to guide them through the leasing process. We have partnerships with dealerships and equipment manufacturers all across the nation – giving you access to topnotch brands without enduring a large financial burden. And our same-day approval process allows you to start leasing equipment in no time!