Vehicle TRAC Lease Example

Many companies lease cars and trucks. This allows them to use late-model vehicles without worrying about disposing of the vehicle a few years down the road. Often auto leases for businesses come with a TRAC (Terminal Rental Adjustment Clause), which specifies that the auto will be sold at the end of the lease. If the auto sells for a lower price than anticipated, the lessee makes up the difference, while, if it sells for more, the excess is paid back to the lessee. This means that the lessor essentially has no risk and is simply providing financing and management of the vehicle.

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