Lease structures

TRAC Lease Explained: Terminal Rental Adjustment Clause

The adjustment clause at the end of the term is the entire point of this lease type.

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TRAC

Terminal Rental Adjustment Clause

End-of-term

Where the adjustment happens

What to know

TRAC Lease

A residual value is set upfront

A TRAC lease sets an expected residual (end-of-term) value for the truck when the lease begins, which drives the monthly payment.

The gap gets settled at the end

If the truck's actual market value at lease-end differs from that set residual, the difference is settled between lessee and lessor, which is the 'adjustment' the lease is named for.

Often used by businesses wanting lease accounting treatment

TRAC leases are common where the lessee wants certain tax or accounting treatment while still carrying some of the truck's residual value risk.

Deep dive

TRAC Lease: Everything You Need to Know

Reviewed by the TruckMars Editorial Team against FMCSA, IFTA Inc., EIA, and NMFTA source data. See our editorial standards →

A TRAC lease sets a residual value for the truck at signing, then settles the difference between that estimate and the truck's actual value at the end of the term, which is the mechanism the lease is named after.

How the Residual Value Gets Set

At the start of a TRAC lease, the lessor and lessee agree on an estimated value the truck will be worth at the end of the term. That residual estimate is a major factor in setting the monthly payment.

What Happens at Lease-End

If the truck is actually worth more than the agreed residual when the lease ends, that gain typically benefits the lessee. If it's worth less, the lessee typically owes the difference, which is the real risk built into this lease type.

Who a TRAC Lease Actually Fits

It tends to fit carriers comfortable taking on some residual value risk in exchange for the payment structure and accounting treatment a TRAC lease offers, rather than a carrier who wants zero exposure to the truck's future market value.

Frequently Asked Questions

Not automatically. The lease settles the value difference against the agreed residual; ownership isn't the default outcome the way it is with lease-purchase.

You typically owe the difference between the truck's actual value and the residual value set at the start of the lease.

It carries a specific risk a standard full-service lease doesn't: exposure to the gap between estimated and actual end-of-term value. Whether that's worth it depends on the rest of the lease terms.

More Guides

Semi Truck LeasingLeasing isn't one thing. The type you pick changes the entire deal.Full-Service Lease vs. Lease-PurchaseThey sound similar. The end state is completely different.Fair Market Value LeaseNo residual value guess upfront. The truck's actual value at lease-end decides your options.Truck Leasing With Bad CreditLeasing and financing with bad credit aren't the same conversation.

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