Ways To Leasing A Commercial Truck – Cost or Bad Credit?

How To Lease A Truck: Leasing Deals (Chevrolet, Ford)!

Let’s say you need a pickup truck, whether to assist the smooth running of your business or for personal use, but you don’t want to finance or simply rent it.

Your only other feasible option would be to lease the box truck at a budget-friendly price. But it begs the question, is leasing a truck the right option?

If yes, what do you need to know before leasing a truck?

This article will offer a comprehensive review of truck lease, from defining what the term “truck lease” means to exploring its advantages and disadvantages.

Also, some frequently asked questions will be answered (pertains to North America).

What Is Truck Leasing?

Say you see a truck you want but instead of paying to get it, you enter into a contract with the owner to own it for a set time and pay a fraction accordingly.

At the end of your lease term, you return the truck or buy it if you still want.

Leasing is basically paying a portion of a truck’s monetary value and owning it for a while before you have to return it.

The gag, however, is you only get to a valid paying turn-in fees if you keep to the following:

  • The truck doesn’t suffer tremendous damage or excessive wear.
  • You haven’t gone past your assigned mileage (number of miles).

As an example, you can take a look at Ford Motor Company’s inventory on their website and see Ford Ranger, Explorers, Fusion, Ford F-150, and Escape leases in the Dallas-Fort Worth area, including least plans for other Ford models.

You can lease a truck for both personal or commercial use.

  • Personal truck leasing

Leasing a truck to use for personal runs is the same as leasing one to run a business.

The difference is the purpose of the lease, which in this case is personal.

A typical lease for a personal truck is a closed-end lease, which is the best solution, especially if you are going for a new pickup truck with a low monthly fee. Usually, you might not need to make a down payment.

  • Commercial truck leasing

Unlike personal truck leasing, most commercial truck leasing options are open-end leases. The advantage here is the lessee gets to have flexible lease-end residuals.

Essentially, you can use the vehicle as you need and cover for it accordingly at the lease-end. Naturally, the monthly payment amounts are considerably higher than for a personal truck lease.

Fees payments made for commercial truck leases are tax-deductible.

The Difference Between Leasing and Financing

Before moving ahead with your decision to either finance or lease a truck, you should first understand the difference between the two.

  • Leasing

Leasing requires you to deposit a monthly payment to hold on to a truck (Front-, Four-, and All Wheel Drive) for a pre-agreed time.

No matter how long you use the truck, you will not own the vehicle outright, you must return it at lease-end. It’s cheaper than financing.

  • Financing

As for financing a truck, here’s how. It goes:

You go to a credit union, a bank, or some other lending outfit and borrow some money from which you will then make monthly payments on a truck for a period.

At the end of the payment period, the truck is yours outright. A reliable financing company is Ryder leasing and financing.

A Step-by-Step Guide On Leasing A Truck

If you read up to this point and you are still certain that leasing a truck is the way for you to go, here’s how you should go about:

  • Draw up your lease deal

The smart practice here is to lease for not more than three years. This way, your truck will still be covered by your manufacturer’s three-year warranty.

You may argue that stretching it to more than 3 years will allow for lower monthly payment, but do you really want to put that much into a truck that may never be yours?

Besides, the truck may require costly repairs; an impractical financial risk.

Summarily, let your contract be for 3 years and 12,000 miles per year.

  • Estimate what it will cost you monthly

This will help you know which is the better deal between the two options and aid you to eventually land on the best deal.

You can use any one of the numerous online lease calculators to estimate it if you can call the local dealership and get the truck’s residual cost.

Leasing A Commercial Truck – Cost or Bad Credit

  • Look out for the best lease deals

From time to time, manufacturers have one discounted lease offer or the other. Do your research and figure out which one is best for you.

  • Find the truck you want or something close

You may not always get the truck make or model year you want to lease, but there will be others that offer similar features.

Examples of good pickup trucks include Ford F-150, Ford Ranger, Honda Ridgeline, Chevrolet Silverado, to mention only a few.

  • Negotiate! Negotiate! Negotiate!

Give it your best and negotiate your best monthly lease payment. Going by the handful of price quotes you should now have, you should already know your best option.

If you feel like you can still improve the deal, take the lowest price and call the other dealership to see if they can beat it.

  • Conclude the paperwork

Once you are convinced that’s your best deal and comfortable with the lease operator as well as the terms on the lease contract, sign the papers and enjoy your new truck or used truck.

The difference between renting and leasing

Yeah, they are different.

It’s a common mistake people make to use one in place of another, but years of error don’t make it acceptable. While they may share some common characteristics, they are, however, different.

Here are a few distinctions:

Time frame

While truck rental will typically require a shorter period, from a few days to a week and maybe a month, leasing involves considerably more time.

Service provider

Truck rental companies are typically in charge of renting out trucks. An auto dealership or a fleet leasing company like Advantage Fleet Leasing and SFI Trucks oversees leasing and IdeaLease company.

Truck ownership possibility

There’s no chance of owning a rental truck. But with a lease truck, depending on the lease agreement or lease contract, you can end up as the owner.

Common Truck Leasing Terms

Before fully going into the whole concept of truck leasing, you must first get a grasp of basic jargon, such as:

Depreciation

This describes the monetary value a truck has lost while on lease. It’s measured over time and removed from the fair market value of the truck.

Residual value

This is essentially the other side of depreciation. It simply refers to the new value of the truck once it’s adjusted for inflation when the lease contract ends.

Capitalized cost

This term refers to the final selling price the truck is negotiated to, minus all extra charges that you may want to add to the payment of the lease. It’s more commonly referred to as cap cost.

Money factor

Usually calculated as a fraction, the money factor is the finance charge of the lease.

Default charge

This is the money charged to the lessee (the individual leasing the truck) for making a late monthly lease payment.

Closed-end lease

It describes a lease that doesn’t mandate a lessee to purchase the truck or account for the difference between the market value and the residual worth at the end of the lease. The opposite is an open-end lease.

Benefits of Leasing A Truck

For small business owners and even medium and big players, having a truck at your beck and call for when you need to move a few things or people around is great.

But the question remains, should you buy one or lease? The following are seven advantages of leasing a truck:

It’s more affordable and offers better savings opportunities

When leasing a commercial truck, you won’t have to pay large expenses. There are no additional costs, additional fees, or extra costs.

But purchasing a truck is another story altogether, the purchase price alone is enough to put a dent in the purse of your small business.

To put it simply, leasing a truck helps your business to make a profit and save money.

You won’t have to pay for depreciation costs

Generally, all new vehicles or a fleet of vehicles depreciate over time, even a leased new truck.

But you won’t need to worry about it because liability falls on your dealership. It leaves you with enough time to focus on other things that matter to your business.

Can I End My Lease Earlier Than Agreed?

 

There will be little or no repair and maintenance needs

The warranty will run for at least three years and will cover most maintenance and repairs, including oil change, tire change, and even routine checks.

It’s different when you purchase the truck as you have to shoulder the responsibility. Warranty may even feature collision coverage.

You will be free of problems associated with truck ownership

It’s simple, you don’t own the truck. You are only leasing and driving it. Issues like compliance, dealer fees, or cost of training drivers (unless they are your lease drivers).

Leasing allows for more flexibility

Leasing a truck is unarguably more flexible than buying one. For one, several leasing companies let you carry on without a down payment if you have a good credit score with no bad credit.

Returning the truck after the end of the lease term is another claim of flexibility. What’s more, the low monthly payments are also designed to be flexible.

Round-the-clock emergency assistance

You just know your leasing company will always come to your rescue in the event that the truck breaks down when you are on a full-service lease.

We can’t say the same for when you go with the purchase option, you are on your own.

You get tax benefits

You get to pay less for taxes since you are only paying a fraction of the truck’s worth.

The cons of leasing a truck

While leasing is a great option, here are a few things to take note of:

  • There’s usually a limit to the truck’s mileage within the lease term. Exceeding this limit will incur additional fees.
  • Recall that you still have to return the truck at the end of your lease agreement. If the truck is in a less than acceptable state by then, it may lead to extra cost.

Popular Queries and Answers!

Who should lease?

Leasing a truck is not limited to anyone or a class of people.

However, leasing is typically most suitable to businesses or people who rack anywhere between 10,000 to 15,000 miles a year and need a new truck every three or four years for efficiency.

Again, anyone or any business can lease a truck.

Can I end my lease earlier than agreed?

While it may not be advisable to terminate your lease prematurely because of the high cost, it’s, however, possible.

It goes beyond paying the termination fee, you also have to pay off the balance of the lease. More often than not, it’s not practical to terminate a lease.

What if my business makes it inevitable to return the truck intact?

It’s simple:

If you know you will use the truck for heavy-duty jobs that may leave the body damaged, you might want to think twice.

But if you must go ahead, know that you will be liable for any damage on the truck that is deemed severe. In case of lease purchase, it won’t matter.

Is residual value the same for all vehicles?

No, it’s not.

Some trucks are designed to be stronger than others. While they are still new, all cars have pretty high residual value.

But as time goes by, only the rugged maintain good residual value. The Ford F-150 is a good example.

Leasing and financing, which is cheaper?

If you read this text from the beginning, you’d know that leasing is cheaper than financing by at least 30% for the same truck. If you look out for dealership special offers, leasing could even be cheaper.

How much does it cost to lease a pickup truck?

It depends on the truck configuration and the leasing company or auto dealership. There’s no one-size-fits-all price.

However, you’re expected to cough out averagely $340 – $385 monthly payment. View our comprehensive truck leasing reviews here!

Can you negotiate a lease?

Yes, you can. In fact, you have to. Just first set down how much you are willing to pay as down payment and monthly lease payment, then you are good to go.

Look for a truck that suits your pocket and bargain accordingly.

Should you lease your next pickup?

It really depends on what you need. Are you planning on getting the most out of your truck and keeping it for a long time or need it for light-duty activities and keeping it for only a while?

If you are the latter, you should definitely lease.

What is the cost of leasing a commercial truck?

Is Residual Value The Same For All Vehicles?There is no exact way of answering this question as the cost ultimately depends on the make, model, size, and age of the truck in question.

But the average cost can be anywhere from $300 monthly for light-duty, low-cost rucks to more than $1,000 monthly for heavy-duty, luxury trucks.

Conclusion

There you go, all you need to know about leasing a truck. If you read up till this point, then you are ready to lease your first truck. Good luck.