Lease vs. Buy

Acquisition Cost

Leasing offers many advantages over traditional bank financing, or even outright ownership. One of the most critical components of any lease vs. buy analysis is the determination of the starting point for each transaction. Often, a company will find that in taking advantage of TBBK Direct Leasing’s purchasing power on the acquisition side, they can save hundreds or even thousands of dollars.

TBBK Direct Leasing is able to use its volume purchasing power, access to special fleet discounts and buying arrangements to drive the acquisition cost of the vehicle down.  Since the cost basis of the vehicle is really the starting point for the calculation of your lease transaction, all of the other factors that make up your lease rate are positively influenced by the use of this reduced acquisition price. Of course, specific examples of this type of pricing can be customized to your needs after an initial free consultation.

Tax Implications

Aside from purchasing benefits, leasing as compared to ownership is generally tax advantageous. Although the tax benefits of a TBBK Direct lease will vary depending upon your particular business and the structure of your lease, your TBBK Direct Leasing Sales Executive will work with you to develop the optimum program for your particular application. With that in mind, the following are some generalities about the tax benefits leasing offers.

These benefits are especially true for passenger cars having a “fair market value” in excess of $15,200 and trucks and vans having a “fair market value” in excess of $16,700 as of 2007.  Vehicles falling into this category may be classified as a luxury vehicle by the IRS for tax purposes, and as such, are then subject to the accelerated cost recovery system (ACRS), a tax device used to calculate levels of depreciation for owned vehicles.

Conversely, companies that lease their vehicles are entitled to take the full amount of the lease payment for each month the vehicle is on lease. Simply stated, that equates to your monthly lease rate times twelve months. That figure may then be applied against earnings when calculating your tax obligations. While in many instances this factor alone is enough justification for a company to lease its vehicles, there are still some other financial considerations which go into the decision.

The Balance Sheet

A properly structured lease is a form of “off balance sheet” financing. Although detailed information regarding your company’s lease obligations is required to be included in the footnotes to your financial statements, the balance sheet itself will not reflect any additional debt.

No less important is the conservation effect that leasing has on your account balances.  Rather than simply making a large capital outlay for a series of vehicles, you can re-invest that money into other portions of your business. Alternatively, you can use leasing as a method of freeing up your existing credit lines for other essential purchases, as leases typically do not encumber your ability to borrow against your company’s existing lines of credit.

Finally, the best way to understand how a lease vs. buy example works is to look at the actual calculations on the basis of the net present value of the cash outlay. As you will discover, the more expensive the vehicle, the more advantageous leasing becomes.  Additionally, TBBK Direct Leasing provides our customers with some of the most competitive financing rates in the industry. Again, the higher your company’s borrowing rate, the more leasing makes sense.

Vehicle Disposal

An often-overlooked component of the lease vs. buy transaction is the proper disposal of the used asset. Although we would all love to keep our vehicles running forever, there comes a point when the vehicle reaches the end of its life cycle ... at least from your company’s perspective. Once the vehicle has reached this point, many companies choose to trade their old vehicle in against the purchase price of the replacement vehicle. While this is really two separate transactions (the selling of your used vehicle and the purchase of your new vehicle), it is often treated as a single transaction. As is human nature, we tend to focus on one transaction or the other, and thus create an opportunity for the dealer to take the advantage during the negotiating process.

At TBBK Direct Leasing, our staff of trained professionals handles the disposal of your used assets, and gets you out of the used car business. Regardless of the age, condition or location of your vehicles, we work for you to maximize the aftermarket potential of your vehicle. What’s more, we do this for you regardless of whether the vehicle is an end of term lease turn-in or an old company vehicle.

Of course, you may be saying to yourself, “But I am interested in a closed end, walk away lease. Why do I care about disposal?” The answer is simple. Since the primary component of the lease transaction is the vehicle’s depreciation (that is the difference between the acquisition price and the disposal value), a company that can maximize your used car potential helps you to establish lower monthly payments. Of course, please keep in mind that a vehicle with a given number of miles on it, and a given age, is only worth a certain amount. TBBK Direct Leasing’s account professionals will help guide you through this process, whether you own your vehicles, or you select an open or closed end lease program.


In addition to financial considerations, leasing offers many benefits from an administrative standpoint. While many of these benefits are discussed elsewhere in this website, it is important to consider these benefits into your lease vs. buy decision.

TBBK Direct Leasing can get as involved or as un-involved in the process as you deem necessary.  Of course, we monitor and track your lease renewals, providing you with valuable insight into the optimal times to “cycle” your vehicles. In the long run, this assists you in saving money, reducing payments and, of course, selecting the right vehicle for the application.

Additionally, we handle the paperwork, such as registering (regardless of location) and licensing your vehicles. No longer do you have to waste valuable resources sending someone to stand in line at the local DMV office, when they should be tending to more pressing matters like servicing your clients.

Plus, we help to ease your accounting functions, by letting you design your invoice in a way that works best for your business (see the billing section for more details). TBBK Direct also helps you when you need it.  Whether you need us to intervene at the “right” levels for help on a warranty dispute, or you need a replacement vehicle immediately, TBBK Direct Leasing works with you to bring your problems and concerns to quick resolution, without additional inconvenience. And all that is just the tip of the iceberg. Remember, with TBBK Direct Leasing you get an unsurpassed level of expertise and creativity with every lease, and most importantly, you always get a live person to answer your questions … not a machine!