What Is a TRAC Lease? Truck & Trailer Financing Guide

In the world of commercial trucks and trailers, flexibility is more than a luxury—it’s a business necessity. One of the most strategic financing tools for fleet-based businesses is the TRAC lease, or Terminal Rental Adjustment Clause lease.

Tailored specifically for heavy-duty vehicles, TRAC leases combine the cost-effectiveness of leasing with the long-term flexibility of ownership. In this guide, we’ll break down how TRAC leases work, what makes them unique under accounting rules like ASC 842, and how Canadian businesses are using them to gain a financial edge.

What Is a TRAC Lease?

A TRAC lease is a type of vehicle lease designed for commercial trucks and trailers. It includes a Terminal Rental Adjustment Clause that allows for flexibility at the end of the lease—based on the actual value of the truck when the term is up.

Unlike traditional leases, TRAC leases provide an adjustable final payment option. If the truck holds more value than expected, the lessee may receive a rebate. If it’s worth less, they may owe the difference.

How Do TRAC Leases Work?

TRAC leases are built around four key principles:

1. Lower monthly payments during the lease term.
2. End-of-term flexibility: You can return the truck, extend the lease, or buy the truck based on its residual value.
3. Adjustment clause: The final payment is adjusted based on the truck’s market value.
4. Tax-deductible lease payments in most cases (check with your Canadian tax advisor).

This structure makes TRAC leases ideal for Canadian transportation businesses managing multiple vehicles or high-mileage usage.

TRAC Lease Benefits for Trucking and Fleet Operators

Here’s how TRAC leases can support your business growth:

✅ Lower Monthly Payments

Spread costs over time without the hefty down payments of traditional loans.

✅ Tax Efficiency

Lease payments may be fully deductible as business expenses, lowering your tax burden.

✅ Flexibility at Term-End

Choose the best path:

• Return the truck
• Renew the lease
• Buy the vehicle at its agreed residual value

✅ Budgeting Clarity

Predictable monthly payments help you allocate capital with more confidence.

✅ Incentive to Maintain Asset Value

Well-maintained vehicles may earn you a rebate at the end of the lease if they exceed residual expectations.

TRAC Leases Under ASC 842 (Accounting Implications)

While ASC 842 is a U.S. GAAP standard, its principles are relevant to Canadian firms reporting to U.S. partners, subsidiaries, or stakeholders.

Key Impacts of ASC 842:

• TRAC leases are generally treated as operating leases.
• Businesses must record a Right-of-Use (ROU) asset and a lease liability on the balance sheet for any lease over 12 months.
• This visibility improves transparency for investors and lenders.

Why It Matters:

• Credit scores and borrowing capacity may be influenced by how your leases appear on financial statements.
• Stakeholder trust improves with full lease disclosure, aiding capital acquisition.

Terminal Rental Adjustment Clause Explained

The defining feature of a TRAC lease is the Terminal Rental Adjustment Clause. It bridges the gap between leasing and ownership by factoring in the truck’s actual market value at the end of the term.

How It Works:

• If the truck is worth more than estimated → You may receive a refund.
• If the truck is worth less → You may owe a small adjustment.
• Either way, you have full control over whether to return or keep the asset.

Advantages:

• Mitigates risk of depreciation
• Rewards maintenance
• Provides market-based flexibility

Case Study: How Mehmi Financial Group Supports TRAC Leasing in Canada

Mehmi Financial Group is a leading provider of TRAC leases for Canadian businesses, especially in industries like transportation, logistics, and construction.

Why Businesses Choose Mehmi:

• Access to 30+ Canadian lenders
• TRAC leases for Class 8 trucks, trailers, and vocational units
• Funding up to $5 million within 48 hours
• Canada-wide delivery and tailored lease terms

Real Results:

From Brampton-based fleets to Alberta’s oil patch carriers, Mehmi has helped dozens of companies upgrade, expand, and manage their fleets with flexible leasing strategies.

✅ Also explore: Refinancing Options for Commercial Trucks

When Should You Choose a TRAC Lease?

TRAC leases are ideal for:

• Businesses operating long-haul or regional truck routes
• Companies that regularly rotate vehicles or expect resale value
• Fleets with high mileage and wear considerations
• Firms that want ownership flexibility without upfront costs

Not sure if TRAC is right for you? Consider:

• How long you plan to use the vehicle
• Your maintenance capabilities
• Whether preserving capital is more important than ownership