Bus

Get On the Road Now With Equipment Financing

Posted on November 14, 2012 by Dave Johnson

Page 1 of 2

With squeezed budgets now the norm rather than the exception, more municipalities, transit agencies, and private tour and charter bus operators are considering equipment financing to maintain their fleets in uncertain economic conditions.

Equipment financing provides a range of flexible solutions that can be customized to fit a variety of needs and circumstances, whether public transit systems or private fleets. For governments and municipalities, equipment financing is a turnkey way to bring simplified processing and budget control together as a solution, no matter how limited the funds. For private tour and charter bus businesses, equipment financing helps guard against equipment obsolescence; enables upgrading of fleets to meet new government environmental regulations; offers tax depreciation benefits; and provides flexibility in loan customization or lease terms to best meet their business needs.

Options for coach operators
Tom Giddens, president of Garden Grove, Calif.-based Pacific Coachways Charter Services Inc., used equipment financing in 2009 to acquire four motorcoaches, in part to meet new environmental regulations on engines set by the California Air Resources Board.

“With the high cost of buses, financing plays a major part,” says Giddens, whose 23-year-old company now operates an 18-unit fleet of seven buses and 11 motorcoaches. “I don’t know too many people who pay cash for them, or whether they should.”

The reasons for using financing vary, but one of the most attractive benefits for private tour and charter bus operators is the ability to preserve capital for other uses, especially in this era of tight budgets. With financing, owners and operators can acquire the equipment they need to stay competitive, but can also reinvest in their businesses and improve their budgeting accuracy with fixed monthly payments and no floating rates.

Equipment financing is also appealing because it provides protection from equipment obsolescence, which is increasingly important as the transportation industry faces additional environmental regulations on engines and equipment. In addition, equipment financing provides the additional benefits of 100% financing and flexibility in terms and end-of-contract purchases options.

Some of the most frequently used equipment financing options for private tour and charter bus operators include:

•    Loan financing.
•    TRAC (Terminal Rental Adjustment Clause) leases.
•    Fair market value (FMV) or true leases.

Typically, a loan is the most popular equipment financing choice for customers who can use the depreciation benefit. If a customer does not need the depreciation benefit or doesn’t value the depreciation, then the TRAC lease is of value because it offers a lower rate.

TRAC leases are the most common type of leases for business owners who want the option of buying the vehicle for a pre-determined price at the end of the lease. By comparison, the FMV lease, or true lease, provides maximum flexibility and low monthly payments, with the option to purchase the vehicle at its fair market value at the end of the term.

View comments or post a comment on this story. (0 Comments)

More News

Alexander Dennis lands double-deck bus order

The 13 buses will have capacity for 120 passengers, 79 of them seated, and will enter service from July 2019 to replace and enlarge tl’s double-deck fleet.

Nova Bus lands largest North American bus order

The five-year contract, covering the period from 2020 to 2024, calls for the delivery of 497 40-foot hybrid buses LFS HEV and up to 1,028 vehicles on option.

BusCon 2018 set to return to Indianapolis in October

Registration is open now for this year's show, which will include a look at electric buses and autonomous vehicles, as well as training courses from NTI and EnerDel.

Creative Bus Sales orders 100 GreenPower buses

The order includes the 15 buses for inventory and demonstration that are on order with GreenPower.

First Transit names new VP, west region operations

Fadi Chakbazof will be responsible for all operations in the west region, reporting directly to Beverly Edwards, COO.

See More News

Post a Comment

Post Comment

Comments (0)

More From The World's Largest Fleet Publisher

Automotive Fleet

The Car and truck fleet and leasing management magazine

Business Fleet

managing 10-50 company vehicles

Fleet Financials

Executive vehicle management

Government Fleet

managing public sector vehicles & equipment

TruckingInfo.com

THE COMMERCIAL TRUCK INDUSTRY’S MOST IN-DEPTH INFORMATION SOURCE

Work Truck Magazine

The number 1 resource for vocational truck fleets

Schoolbus Fleet

Serving school transportation professionals in the U.S. and Canada

LCT Magazine

Global Resource For Limousine and Bus Transportation

Please sign in or register to .    Close