Leasing vs buying NEMT vans: the monthly cost, mileage limits, and tax effect

Buying tends to cost less over a busy NEMT van’s life, because heavy miles make lease overage likely and an owner keeps whatever the van is worth at the end. Leasing wins on monthly payment and cash up front, which is why it appeals to a company still waiting on its first broker payments. The right answer comes from three numbers you can get before signing anything: the miles your routes put on a van, the payment on each option, and what the van will be worth when you are done with it.

Four ways to put a van on the road

Each option splits the cost and the risk differently.

A TRAC lease is a commercial structure written into federal tax law. Under 26 U.S.C. 7701(h), the terminal rental adjustment clause adjusts the rent up or down at the end of the lease based on what the lessor gets when it sells the vehicle. The clause alone does not turn the deal into a purchase for tax purposes. One condition for keeping lease treatment is a separately signed statement in which you certify that more than half the vehicle’s use will be in your business.

A lease and a loan on the same van

The example below uses a $69,745 van, the median price GSA paid in 2026 for a new full-size wheelchair van with two positions and a rear lift. All rates and terms are examples, not quotes. Taxes, fees, and insurance are left out so the structure is easy to see.

The lease payment is about $205 a month lower, and it needs no down payment in this example. That is real help when broker payments arrive after payroll is due. See NEMT cash flow for that math.

Now count what each option leaves you with. If the owned van sells for the same $20,923.50 the lease assumed, the loan’s net cost is $61,029.23, about $4,100 less than the lease. Add mileage overage to the lease and the gap widens. If the van turns out to be worth much less than the residual, the closed-end lease protects you and the loan does not.

The same loan at 13%, the SBA cap described below, costs $1,683.98 a month and $87,805.32 over 48 months, down payment included. Stretching the 9% loan to 60 months cuts the payment to $1,303.01, under the lease, but adds about $3,200 in interest.

Mileage limits are where NEMT leases go wrong

NEMT vans cover far more ground than a typical company car. Florida’s useful life table for transit vehicles expects a converted minivan to last 5 years or 200,000 miles, roughly 40,000 miles a year. A lease written around a lower allowance will charge you for the difference.

Work it through with example numbers:

1. Allowance: 30,000 miles a year, 120,000 over the 48-month term.
2. Actual use: 40,000 miles a year, 160,000 over the term.
3. Overage: 40,000 miles at an example charge of 20 cents a mile, $8,000 due at return.

In the example above, that $8,000 turns the lease’s $65,141.83 into $73,141.83, about $12,100 more than the loan’s net cost. Pull a month of trip records before you negotiate, and ask for an allowance that matches your real miles plus a margin for new contracts. If the lessor offers extra miles up front, compare that price per mile with the overage charge.

A TRAC lease may carry no per-mile charge at all, but miles still cost you. A high-mileage van sells for less, and a shortfall against the residual comes back to you at settlement.

Commercial leases skip the consumer protections

Regulation M, the federal consumer leasing rule, covers a person leasing for personal, family, or household use. A van lease signed by your company is a business lease, so none of Regulation M’s required disclosures or limits come with it. What the contract says is what you get. Read these terms before you sign:

• Annual mileage allowance and the charge per extra mile
• The wear-and-tear standard for return, including the lift, ramp, floor, and securement tracks
• Early termination charges, which matter if a broker contract ends
• The purchase option price at the end of the term
• Insurance the lessor requires, and who is named on the policy
• Whether you may add equipment, such as a second securement station or cameras, and who owns it at return
• Who handles lift and ramp service, and whether the lease covers downtime

Louisiana also holds leased NEMT vehicles to the state’s insurance requirements for leased vehicles, so show the lease to your insurance agent before you sign it.

The tax effect of each option

Taxes change the comparison, and the rules differ by structure. Confirm your situation with a tax preparer; the points below come from IRS Publications 463 and 946.

If you lease:

• Under actual expenses, the portion of every payment tied to business driving is deductible. A payment made in advance gets divided across the full lease term.
• Payments that are really buying the van are not lease payments and cannot be deducted as rent, even if the contract calls them lease payments.
• Electing the mileage rate on a leased van binds you to it for every year of the lease. For 2026 the IRS set that rate at 72.5 cents per business mile for January through June, rising to 76 cents for July through December.
• The yearly lease inclusion amount, which trims deductions on expensive leased cars, applies to passenger automobiles, and Publication 946 leaves vehicles used directly to carry passengers for pay out of that category. For other leased vehicles, an inclusion amount comes due only in a year business use falls to 50% or less.

If you buy:

• Qualified property bought and placed in service after January 19, 2025 gets a 100% first-year depreciation allowance unless you elect out, and certain used property qualifies along with new.
• Section 179 expensing for tax years beginning in 2026 is capped at $2,560,000, reduced once total purchases pass $4,090,000. Heavier passenger vehicles, those above 6,000 pounds GVWR but not over 14,000, face a separate $32,000 cap unless an exception applies, such as seating for more than nine behind the driver.
• If you are self-employed, you can deduct the business-use share of the loan interest.
• Claiming Section 179 or special depreciation on a van rules out the standard mileage rate for that van in later years.

Either way, the mileage rate disappears for every vehicle once five or more are in business use simultaneously. A company running five vans at once has crossed that line, so plan on actual expenses. See NEMT business taxes for the rest.

Broker and Medicaid rules for leased vans

Louisiana and Virginia both allow leased vans, but the paperwork has to line up.

The federal accessibility rule does not care how you pay. Under 49 CFR 37.103, a private company primarily in the business of carrying people must make a new vehicle other than an automobile accessible whether it purchases or leases it, unless its demand-responsive service as a whole already gives riders with disabilities equivalent service. The ADA requirements guide explains that test.

Financing a purchase

A purchase does not have to mean paying cash. SBA 7(a) loans can finance equipment, including vehicles:

• Term: 10 years or less, unless the equipment’s useful life is longer.
• Rate: negotiated with the lender, within SBA caps. For variable-rate loans of $50,001 to $250,000, the cap is the base rate plus 6.0 points. Prime stood at 7.00% on September 25, 2026, so the ceiling was 13.00%.
• Microloans: as much as $50,000, repaid over no more than 6 years, made through nonprofit intermediary lenders.

Set the loan term by the van’s working life, not by the lowest payment. Payments that run past the day you retire the van buy you nothing. The NEMT business funding guide covers lenders and what they ask for.

How to decide

1. Pull real mileage. A month of trip records per van, multiplied out to a year, beats any estimate.
2. Confirm what each program wants for a leased van, such as the copy of the lease Virginia expects in the vehicle packet.
3. Quote the same van both ways, with the lease’s allowance, per-mile charge, and buyout price on paper.
4. Put your numbers into the example table: payments, likely overage, and the van’s value at the end.
5. Have your tax preparer compare first-year depreciation against lease deductions for your income.
6. Line the term up with your contracts and the van’s life, so you are not leasing past a contract that ends or paying on a van you have retired.

A lease can make sense for a first van while cash is tight, or when you plan to replace vans on a short cycle. Buying tends to win once the company is steady and vans run full days. The cost per mile calculator shows what either choice adds to every mile, and the replacement guide covers when to trade a van in.

Knowing your miles before you sign

The mileage allowance is the number that makes or breaks a lease, and guessing it is expensive. HealthRide records GPS miles on every trip and lets you download the trip log in CSV or PDF form, so you can add up what your vans really drive before you negotiate an allowance. See reports.