Financing that pays for itself

Max Heine
mheine@rrpub.com

Jose Murillo found he was burning about 1/ gallons of fuel per hour when idling his 500-hp Detroit Diesel to heat or cool the 84-inch sleeper of his 2001 Freightliner Classic. So in 2006, he began leasing a Willis auxiliary power unit that burns only 1⁄5 to / gallon per hour.

“When I paid off my truck loan a couple of years ago, leasing allowed me to get an APU installed right away instead of waiting until I had enough money saved up to buy one,” Murillo says.

The beauty of APU financing is not just the everyday attraction of buy now, pay later, but the potential to break even from the first month, say APU makers.

“For a lot of people, the product pays for itself,” says Chad Koll, finance manager for Ingersoll Rand Financial Services. Ingersoll Rand’s Thermo King subsidiary makes the TriPac APU. For a customer who averages a high idle time, a financed APU can generate “positive cash flow” even after the monthly payment, Koll says.

Ingersoll Rand offers traditional financing for APUs for 24 to 36 months, Koll says. There is no down payment, and the customer makes no payment for the first 30 days.

Most Willis buyers get a 36-month lease, though some qualify for the maximum 39 months, says Dan Worsley, a vice president for Lease Corporation of America. LCA handles financing for several APU makes, including Auxiliary Power Dynamics, which produces the Willis unit.

A Willis APU commonly costs $9,500 to $10,500, Worsley says. At the lower end, payments on a 36-month lease often are around $325. Depending on the customer’s credit rating, the interest rate can range from 9 percent to 18 percent.

“We’ve been able to get seven out of 10 owner-operators approved for their purchase of an APU,” Worsley says.

The tax benefits of buying an APU with traditional financing are the same as those of leasing to purchase, only the timing of the depreciation claims might differ, says Perry Wiseman, owner of Truckers Accounting Service in Omaha, Neb. More important than tax strategy, he says, is counting the total cost – principal plus interest – over the life of the financing before making a decision.

Also, Wiseman cautions that qualifying for the Internal Revenue Service’s definition of a lease has to do with the lease’s conclusion. “If the residual amount due is less than 10 percent of the value, it’s not really a lease, it’s a finance,” he says.


DOING YOUR OWN NUMBERS
Indiana owner-operator Bill Stevens determined that using his Willis APU 50 hours a week, with fuel at $2.60 a gallon, almost saves enough to cover his APU lease payment.

Your figures probably will differ, especially idling hours per week, which vary widely across the industry.

Your calculation also needs to include how much fuel per hour you’ll save by running an APU in place of your engine; a gallon or less is commonly assumed.

To zip through the math, use an online calculator. The U.S. Environmental Protection Agency has one: epa.gov/smartway. Some makers of anti-idling equipment, such as Thermo King, also have them: www.thermoking.com.

Showcase your workhorse
Add a photo of your rig to our Reader Rigs collection to share it with your peers and the world. Tell us the story behind the truck and your business to help build its story.
Submit Your Rig
Reader Rig Submission