What is Residual?
When it comes to financing heavy equipment there is terminology that is important to be familiar with.
A common word in leasing is “residual”. You will see this term used often in TRAC leases (see benefits of a TRAC Lease). Residual is a percentage of the total equipment price that is suspended from the lease payments. The equipment price, less the residual, is what the lessee will be making payments on for the length of the lease. A residual will typically increase for shorter leases and decrease for longer leases. This is what allows a client to have a lower payment on a TRAC lease than that of a loan or EFA (Equipment Finance Agreement).
At the end of a lease term, a client can pay off the residual (leftover percentage) to purchase the equipment outright if they wish. Depending on the equipment, it could prove fruitful to the client to pay the residual and sell the equipment and keep the positive equity.
Trinity Capital has seen many clients in many different industries experience the benefits of flexible financing. From trucking to construction Trinity Capital can provide the right lease or loan for you. If you need heavy equipment to get your job done give us a call at 833-659-2203 or visit us at mytrinitycapital.com.