Commercial Vehicle Leasing vs. Business Auto Financing Guide

TRAC lease vs. closed-end lease: Key differences for fleets

TRAC leases differ from standard closed-end leases in several ways:
Residual value risk: In a TRAC lease, your business assumes responsibility for the vehicle’s residual value at lease end.
Flexibility: TRAC leases often allow higher mileage and less restrictive terms,¹ ideal for businesses with heavy vehicle use.
Payment structure: Payments may be lower during the term, but final settlement depends on resale value.

¹Subject to GM Financial’s guidelines.

Open-end lease vs. closed-end lease

	Open-End Lease (TRAC)	Closed-End Lease
Residual value risk	Business assumes responsibility for residual value	Lessor assumes responsibility for residual value
Flexibility	High mileage and adjustable terms	Fixed mileage limits and strict terms
End-of-term costs	If not purchased, business responsible for vehicle settlement for trade-in value or sell price at auction	If not purchased, business responsible for excess wear and use charges, if applicable
Ideal for	Fleets with variable usage and high mileage	Fleets with predictable usage and mileage
Tax considerations	May offer potential deductions (e.g., Section 179)	Write off entire payments

Tax benefits and considerations

TRAC leases may offer tax advantages, such as potential deductions under Section 179 tax benefits. These benefits vary by business type and should be confirmed with a tax professional.

Total cost of ownership and TRAC leases

Total Cost of Ownership (TCO) is everything your business spends on a vehicle during the lease, including monthly payments, maintenance, insurance and any end-of-term costs. TRAC leases offer flexibility, but because you take on residual value risk, your total cost can vary more than with a closed-end lease.