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November 16, 2018

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The purchase of a fire truck for a fire department – big or small – can be a monumental addition, not only to a department, but also to the surrounding community it serves. Even though the benefits of an apparatus purchase significantly outweigh its costs, the financial obligation that comes with it can be daunting. Departments can utilize cash reserves, assess taxes, raise fees, or create indebtedness to pay for a new fire truck. Leasing has proven to be an easy, flexible, and cost effective way to purchase fire apparatus. Pierce’s custom payment leasing options can be extremely helpful to any municipality looking to add a quality fire apparatus to its fleet.

 

Why Do Fire Departments Lease?

Leasing is Easy

Lease payments for both a custom-built and stock fire apparatus, begin one year from the lease commencement date, which simplifies budgeting, are subject to annual appropriation (except for volunteer fire departments). Public debt is not created and voter approval is generally not required. In addition, leasing documentation is much simpler and the funding process is expedited on the customer’s end.

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(Note:  For volunteer fire departments to qualify for tax-exempt interest, the IRS requires them to publish a notice in a local newspaper and have a meeting no sooner than (14) days after the notice appears.)

Leasing is Flexible

Generally, payments on fire apparatus are made on an annual basis. Nonetheless, there is flexibility in this area in the sense that lease payments can also be made on a semi-annual, quarterly, monthly, or payments can also be "stepped up" or "stepped down", depending on what is most beneficial to the department’s budgetary needs.

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Leasing is Cost-Effective

Leasing offers a cost-effective solution to fire departments because the interest portion of each lease payment is exempt from federal and state income taxes, resulting in a lower interest rate for the municipality. In addition, leasing also allows a department to receive Pierce’s industry-leading prepay discounts to lower the effective interest rate and payments. 

 

Types of Leases

Lease Purchase

Lease purchase is an option in which municipalities pay to own the apparatus. The terms for this product range from 2 to 15 years with a one dollar purchase option. This plan is desirable for municipalities that prefer to have ownership of the apparatus but want to spread the capital costs over a period of time.

 

Turn-In Lease

The turn-in lease is an option in which municipalities pay to use the apparatus over a predetermined lease term. This plan contains a “balloon payment” for the estimated resale value of the apparatus at the end of the lease. Terms range from 2- to 10-years and customers can choose between 10,000 and 15,000 annual mileage options. At the end of the term, two options are available to the department:

  1. The department can purchase the apparatus by paying or financing the balloon payment OR
  2. The department can turn-in the apparatus to Pierce and purchase a new Pierce apparatus. In this case, Pierce pays the balloon payment on behalf of the department.

This plan is preferable for municipalities that want to pay for the use of the apparatus over the term of the lease and desire a flexible, cost-effective fleet management program.

 

Do you think leasing might be the right fit for your department? We can help. Take a closer look at our leasing program, plans and benefits to see how the Pierce Financial Solutions program can help you get behind the wheel of your new apparatus.

 

 

 

Posted: Nov 16, 2018 1:29:43 PM by Pierce Mfg.

Topics: Customers

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About Pierce Manufacturing
Pierce Manufacturing Inc., an Oshkosh Corporation [NYSE: OSK] company, is the leading North American manufacturer of custom fire apparatus, including custom and commercial pumpers, aerials, rescue trucks, wildland trucks, minipumpers, elliptical tankers, and homeland security apparatus. In addition, Pierce designs its own foam systems and was the first company to introduce frontal airbags and the Side Roll Protection system to fire apparatus. Pierce markets its products through the industry’s largest and most comprehensive dealer and service network. The company enjoys a nationwide web of dealerships with over 600 certified and factory trained Service Brigade technicians and over 50 service centers. Visit piercemfg.com to learn more about Pierce.

About Oshkosh Corporation
Founded in 1917, Oshkosh Corporation is 100 years strong and continues to make a difference in people’s lives. Oshkosh brings together a unique set of integrated capabilities and diverse end markets that, when combined with the Company’s MOVE strategy and positive long-term outlook, illustrate why Oshkosh is a different integrated global industrial.  The Company is a leader in designing, manufacturing and servicing a broad range of access equipment, commercial, fire & emergency, military and specialty vehicles and vehicle bodies under the brands of Oshkosh®, JLG®, Pierce®, McNeilus®, Jerr-Dan®, Frontline™, CON-E-CO®, London® and IMT®.

Today, Oshkosh Corporation is a Fortune 500 Company with manufacturing operations on four continents. Its products are recognized around the world for quality, durability and innovation, and can be found in more than 150 countries around the globe.  As a different integrated global industrial, Oshkosh is committed to making a difference for team members, customers, shareholders, communities and the environment. For more information, please visit oshkoshcorporation.com.

®, TM All brand names referred to in this news release are trademarks of Oshkosh Corporation or its subsidiary companies.

Forward-Looking Statements
This press release contains statements that the Company believes to be “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact, including, without limitation, statements regarding the Company’s future financial position, business strategy, targets, projected sales, costs, earnings, capital expenditures, debt levels and cash flows, and plans and objectives of management for future operations, are forward-looking statements. When used in this press release, words such as “may,” “will,” “expect,” “intend,” “estimate,” “anticipate,” “believe,” “should,” “project” or “plan” or the negative thereof or variations thereon or similar terminology are generally intended to identify forward-looking statements. These forward-looking statements are not guarantees of future performance and are subject to risks, uncertainties, assumptions and other factors, some of which are beyond the Company’s control, which could cause actual results to differ materially from those expressed or implied by such forward-looking statements.

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