Finally; A Great Auto Lease* for Physicians

We all know that leases are difficult to understand. Leases incorporate specialized wording and calculations so that only those in the industry really know the ins-and-outs of the game. Independent Lease companies must pay overhead, employee commissions and, since they buy the vehicles from a dealer, must add those costs to the price of the vehicle. The true cost of the vehicle to the physician can quickly get lost in the maze of residuals, terms, rates, tax credits, etc. They won’t be buried or unknown anymore. The BCMS Automobile Program is designed to help you through this confusion, eliminate the middleman, and determine which lease makes the most sense for you. For the medical professional who uses their vehicle for a commercial purpose (defined by the IRS as 51% or more business use), the BCMS/Frost Commercial TRAC Lease (Terminal Rental Adjustment Clause, an IRS term), is now available.

This is how it works. Transportation companies have been using TRAC leases for years because they offer significant advantages. A TRAC lease builds equity in the vehicle over time while having the monthly payments, or rentals, deductible as a business expense (rather than depreciate the asset). At the end of term, the person leasing the vehicle will either purchase the vehicle at the pre-agreed residual price or return the vehicle and share in the residual upside, if any. Obviously, in the event the residual is set too high or the vehicle is in poorer condition than expected, the value of the vehicle could possibly be less than the residual, resulting in an additional expense. However, the residuals on the BCMS/Frost leases are set conservatively, creating potential upside for the physician. Medical professionals that use their vehicles for 51% or more for business should consider the advantages of the TRAC Lease. TRAC provisions can benefit the lessee in four ways.

• First, they allow the lessee to share in the residual sales value.
• Second, because the lessee guarantees the vehicle's residual value, the rentals paid may be lower than otherwise available.
• Third, because the lessee guarantees the residual there are no mileage limitations or "adders" at the end of term.
• And fourth, the monthly payments, or a portion thereof, may be tax deductible.

If you can qualify your car, truck or SUV as a commercial vehicle, you now have another financing option available that may make sense for you. If you have questions, call your CPA or tax expert and then call our Automobile Program Director, Phil Hornbeak, at 301-4367.

*Note: Equipment leasing is also available to BCMS members!

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