But what do these companies actually do? Let’s learn more about commercial leasing in this article.
What Does Commercial Truck Lease Entails?
In a commercial truck lease, the leasing company offers financial help to fleet companies by providing a flexible option to pay for the use of the trucks.
So, instead of buying the fleet or taking a loan to pay for it, the trucking company makes monthly payments to use the vehicles.
The monthly rate is usually determined by the purchase price of the vehicle, the residual value after the lease is over, and the sales tax.
So, the residual value is subtracted from the purchase price; the sales tax is added to this value to determine the monthly rate.
Depending on the company policies, lease agreement, and other expenses that might arise, certain charges may be added to determine the monthly lease rate.
A commercial lease can be capital or operational. In capital leases, the trucker has the option to purchase the truck when the lease is over.
However, in operational leases, at the end of the lease, the trucker doesn’t enjoy this benefit. View how to lease a truck for business here!
The Advantages and Disadvantages of Leasing A Commercial Truck
Leasing a commercial truck is a convenient option for fleet operators. However, it has its advantages and disadvantages.
Leasing a commercial truck, especially a big rig semi, has the following advantages:
- Financial flexibility
Leasing a commercial truck is more budget-friendly than purchasing one. With a commercial lease, you pay lower upfront fees and monthly rates.
- The leasing company handles maintenance and repairs
Occasionally, the trucks will need repair. Leasing companies often take responsibility for the repair and maintenance of the vehicles.
So, if you own a fleet, you don’t have to worry about setting up a repair workshop for the trucks.
- Flexible plan to upgrade trucks
Upon the expiration of each lease, you have the option to upgrade the models of your vehicles.
That means you can request newer models or even different brands at the end of each lease
Here are the disadvantages of leasing a commercial truck:
- Ownership of the truck revert
Because you are the beneficiary of a commercial vehicle lease doesn’t make you the truck owner.
At best, you can enjoy exclusive use of the truck while the lease agreement is operational.
Unfortunately, any personal expenses incurred by the trucker on the vehicle are for the benefit of the leasing company.
- Long-term costs are higher
Most truck operators opt for leases because they can’t afford the upfront payments associated with purchasing a truck.
There’s only one problem: in the long run, the entire cost incurred on the lease is usually higher than it would have been if you had purchased the vehicle.
- Limitations on use
Because you are bound to the lease contract, the usage of the truck is limited to the scope of the agreement.
For instance, you can’t permanently alter the vehicle. Also, there are usually mileage restrictions for the trucks.
How Do I Get Best Commercial Truck Lease Deals?
While some leasing companies don’t require a credit score check, others do.
A good credit score is essential because that can make you get a good deal. Besides, you can get the best commercial lease deals from the top trucking companies.
Some of these are Ryder, Penske, Uhaul, etc. They are reliable and have a variety of deals to suit your needs.
Also, if your budget is low, you should consider leasing a used truck. The rates are usually lower than those of new trucks.
Some companies that lease used trucks are MHC Truck Leasing and Rental, Bastrucks, Idealease rentals, etc.
What Are The Average Rates or Prices?
The rates to lease a truck depend on:
- The size
- Whether it is used or new
- Model and brand
Typically, a small truck can cost as much as $400, whereas a bigger one can cost as much as $1,000 or more.
Commercial Truck Leasing vs Buying
You may be torn between buying a truck or leasing one since both have their pros and cons.
The choice between buying a truck and leasing it is a tough one. You have to consider some factors before deciding.
- Immediate budget
If you can only afford to make a lower upfront payment, then you should go for a lease.
However, if you can afford to pay for a truck, you can buy one instead of taking a lease.
- Long term vs. short term goals
Are you into trucking for just a short period? Leasing might be your best option.
That way, you can quickly dispose of the truck when you want out of the business. But if you are into it in the long term, you should consider buying your vehicle.
- Ability to maintain a truck
In case you can’t afford the maintenance and repair cost of a truck, you should opt for a lease.
Many leasing companies have full-service lease options that cover the maintenance and repair of the leased vehicle.
Which are The Largest Truck Leasing Companies?
In the U.S., the largest truck leasing companies are Ryder, Penske, and AMERCO.
- Ryder System Inc.
They have been operating since 1933, and now they have over 800 outlets in America. Their leasing plans usually cover maintenance, and they offer a warranty on their trucks.
- Penske Truck Leasing Co
Penske has over 2,500 outlets for its clients in the U.S. and Canada. In addition to truck leasing, they provide roadside assistance and also maintenance and repairs to their clients.
Through its subsidiary company, U-Haul, Amerco offers trucking services.
They have over 175,000 trucks in the U.S. With their Patriot truck leasing program, you can lease their box truck every month.
How does full service truck leasing companies work?
Full-service truck leasing companies make contracts with their clients to cover all maintenance and repair on the leased trucks.
Essentially, the monthly rate will include the cost of maintenance; so when there is any need for repair or maintenance of the vehicle, it would be the leasing company’s responsibility.
Commercial truck lease agreements for trucking company
A commercial truck lease agreement is a contract between a leasing company and a client. This contract contains the terms of the agreements.
Most commercial truck lease agreements contain the terms on monthly lease rate, mileage restrictions, maintenance and repairs, term duration, lease renewal, default fees, etc.
It is crucial to carefully read through the lease terms before you agree to them.
Enterprise commercial truck lease Vs Penske Vs Ryder?
Enterprise commercial truck leasing is owned by one of the biggest car rental companies in the world. They have a variety of trucks for lease and rentals.
However, they only offer services to truckers for local moves.
So, any truck you lease from them can only be operational within the country. This makes them less of a competitor than Ryder or Penske.
On the other hand, both Ryder and Penske offer services for local and long-distance moves.
However, while Penske allows truckers to make one-way moves, Ryder permits round-trip moves only.
Your Commercial Leasing Queries & Answers!
How do I lease my truck to a company?
Leasing your truck is possible if a truck company makes an offer or you make an offer to them.
When both of you agree to lease your vehicle, you sign a lease agreement together.
The lease agreement should contain basic terms covering who pays for maintenance and repairs, insurance, and gas.
Is leasing a commercial truck a good idea?
If you want to own your vehicle and have the budget for it, owning your vehicle is a better option.
If not, you should lease a commercial truck.
Many fleet operators enter into lease agreements with commercial truck lease companies to provide the vehicles they use.
Depending on your needs, leasing may be the better option than purchasing a new truck.
And lastly, remember to go through your lease agreement carefully before attesting to it.