Fire Truck Balloon – What is a Turn-In rental?
Turn-in rentals for fire equipment are conventional 5 or 7 year city rental purchases with 1 important difference – you can’t pay $ 1 in the end to have your equipment after making a payment.
You have 2 choices:
Buy trucks about 30% – 50% of the original costs, or
Turn it back to the manufacturer if it meets certain requirements (or pay a penalty for the manufacturer to accept the truck as it is)
Perfect Turn-In rental for firefighters who:
Has an official replacement program that replaces the fire truck every 5 or 7 years, and
Will maintain trucks in terms of factory operations, and
Are 100% sure they will buy a replacement truck from the same factory, or
No worry about collecting or borrowing money if they choose to buy trucks in 5 or 7 years.
Discipline is needed to maximize the effectiveness of Turn-In Lease. If your department has a definite plan and runs its financial plan and operations properly, Turn-In Lease is a good choice. Make sure you agree with the 4 conditions listed above.
Fire Truck Balloon
Turn-in rentals are not perfect for firefighters who:
Not fully committed to replacing their truck in 5 or 7 years, or
Not sure that they can maintain the truck according to factory requirements, or
Not sure that they will buy a replacement truck from the same factory, or
Have concerns that they cannot collect cash to buy trucks or worry about higher interest rates in 5 or 7 years to borrow the purchase price.
If one of the conditions above describes you, a Turn-In Lease might not be the best choice for you.
How does Turn-In Lease work?
Turn-In Lease is the purchase of a conventional fire truck rental that requires annual payments of 5 or 7 and large balloon payments in the end. Contracts allow you to buy trucks with balloon payment amounts or allow you to “hand over” fire trucks to new trucks if you 1.) buy new trucks from the same manufacturer and 2.) fire trucks are stored according to the requirements specified in the contract terms.
If your fire truck does not meet the requirements, you must pay a penalty to compensate the manufacturer for conditions that are not met.
It is important to know what are the requirements! Get a copy of the requirements in advance and have them sign as part of your contract to make sure you know the rules.
Does Rent Turn-In save money?
Yes and no. The full answer depends. If you use a fire truck exactly as requested by the manufacturer and will only finance your truck for the same 5 or 7 years, you will pay lower payments each year for the budget. Most manufacturers provide a comparison of “money savings” using a 5-year Rental Purchase that matches how you will finance a fire truck. This is not always true – see HELP INSTRUCTIONS below.
Turn-in rentals will be more expensive if you finance your fire truck for more than 5 or 7 years. This is the reason:
HELP INSTRUCTIONS: Turn-in Lease payments are based on a payment schedule of 8 1/2 years. Choose a payment schedule of 9 or 10 years if you like the amount of Turn-In Lease payments but are turned off by several other factors from Turn-In Lease.
Should I use Turn-In Lease?
Each department must make its own decisions. This article cannot tell you the “right” way – every department is unique! There is no right and universal way. I have spoken with the department that has had a great success with Turn-In Leases and I have spoken with the department that experienced the disaster.
The key factor is to conduct a thorough analysis of the Turn-In Lease terms and conditions and decide if it’s right for you.
If you feel you don’t fully understand the exact details of a Turn-In Lease offer, get help. However, the devil will be in the details of this complex financial offer.
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