Is it better to lease or buy a truck for business?
Believe it or not, that is a recurring dilemma for business owners whose businesses require the use of trucks or vans.
To put it simply, there is no hard and fast rule when it comes to making the best decision on this subject.
Every business owner must determine the best option for their business, after considering several factors.
And then, there is the option of combining both styles of operation.
Some fleet owners prefer to use both leased trucks and purchased trucks.
Beyond financial constraints, many factors can affect a business decision on whether to lease or buy a truck.
For example, factors like your trucking routes, seasonality, operation style, organization preferences, and the configurations of your trucks can affect this decision-making exercise.
By diving deep into the pros and cons of both options, this article will help you decide between leasing and owning a truck.
At the end of this read, you may also opt to combine leasing and owning trucks, depending on what you deem the best fit for your business.
Leasing Trucks for Business Vs. Buying
Let’s take a quick look at some of the advantages and disadvantages of leasing trucks and buying or owning trucks.
This section will give you a clearer view of what they are about and hopefully, you can decide the best option for your business.
Advantages of Buying or Owning a truck fleet
One of the primary advantages of owning a truck fleet is the flexibility it grants your business.
This flexibility helps you organize and reorganize your delivery schedule in a way that fits your business needs and ensures customer satisfaction.
The flexibility owning a truck fleet offers can be seen in scenarios where you have to make impromptu or urgent last-minute deliveries.
Similarly, owning a truck fleet is a very good advertisement tool for your business.
As your trucks move from one location to another, people will notice your logo and printed business name on your trucks and it might spur them to research your business.
Owning a truck fleet also helps you beat the demands of time constraints especially if your business is time-dependent.
Therefore, delivery will always be made on time with no leftovers.
In addition to the many advantages owning a truck fleet offers your business, owning and running your delivery fleet helps your business have one-on-one interaction with your clients instead of going through a third-party delivery service.
Disadvantages of Buying or Owning Trucks for your business
Owning a truck fleet has one considerable disadvantage that has many business owners frowning at this idea, and that is the costs associated with owning and maintaining a fleet.
Although there are some fleet sales that can help you secure a bargain, the price of owning a fleet is still high.
Secondly, insurance costs are considerably high for truck fleet owners, and depending on the size of your business, it will eat deep into your business profit.
Throw maintenance and repair costs in there, and you have quite a bucket full of expenses.
Thirdly, owning a fleet means you will be tasked with providing a storage space where your drivers can park your trucks after the days’ job is done or when the trucks are not operational.
Some companies simply send their drivers home with the trucks but a smarter approach will be to build a storage facility where you can safely park your trucks.
And that also costs money.
Advantages of Leasing trucks
The primary advantage of leasing a truck for your business is the lower financial constraints or demand it places on your business compared to buying a truck.
You won’t be puzzled about going through credit applications and upfront payments. Major rentals also offer sweet leasing programs.
Leasing trucks for your business come with flexible payment plans and offer you the option of spreading your lease payments over several months.
You are not required to pay a huge down payment or a large amount of money when purchasing a truck.
Leasing trucks also saves you the stress and cost of repairs and maintenance.
As the rental company handles this section, you do not need to set up a repair or maintenance shop for your company trucks.
Lastly, leasing trucks make your business immune to the depreciating effect associated with trucks.
Automobiles or vehicles depreciate over time after you buy them, but leasing gives you an opportunity to get new trucks when a lease expires, thereby keeping your fleet up-to-date.
Disadvantages of Leasing a truck
Leasing does not give you the freedom to do whatever you like with the truck.
Leasing is more like a rental, but for a longer period. View our weekly rental tips! Therefore, it requires that you return the truck in the same condition it was when you took it.
No personal modifications or upgrades are allowed to suit your taste because the truck does not belong to you.
Many commercial leasing truck companies place certain restrictions on annual mileage, and in your best interest, it’s simply wise that you obey it.
Companies and businesses who move a lot and cover long distances will find this option unacceptable because it hampers the proper flow of their business.
Exceeding the agreed-upon annual mileage will attract a penalty, which is often clearly written in the lease terms. View our tips about Ryder unlimited mileage!
Leasing a truck is similar to signing a binding contract.
If your company or business folds and is unable to pay up the monthly payment, you cannot just return the truck…
… you will be expected to pay up what is left for the duration of the lease, whether your business is in operation or not.
What Does Buying A Truck for Business Write Off entails?
Tax benefits are available when you buy a new truck (or at least, new to you) for your business by taking a section 179 deduction.
By implication, this deduction helps you deduct a major part of your truck’s entire cost in the first year of use.
This deduction is only applicable when you’re using it for a business.
How Does Lease or Purchase Trucks Affect My Taxes?
Leasing trucks for your business will attract lower taxes than when you decide to buy trucks.
This is one of the many advantages associated with leasing a truck.
The burden of taxes does not rest on your shoulder in the same magnitude as it does with businesses that own trucks.
Is It Better To Lease or Buy Truck If Self Employed?
Leasing a truck gives your business some tax advantages, especially for self-employed truck drivers driving expensive trucks.
A self-employed businessman is privileged to deduct business-related truck expenses such as parking fees and tolls, lease fees, garage rent, insurance, oil, gasoline, registration fees, and repairs.
On the other hand, truck ownership does not come with all these benefits, although it grants you a measure of flexibility and customization.
Is Owning A Semi-Truck Profitable?
Yes, owning a Semi-Truck is a profitable business, and leasing this big rig semis is a huge industry on its own.
Your business can accumulate an average gross per truck of between $4,000 and $10,000 per week.
Your take-home pay will range between $2000 and $5,000 weekly.
Investing in this business can also be very profitable as you stand the chance of earning between $500 to $2,000 per truck every week.
FAQ about Leasing Vs Purchase!
Is it better to lease or buy a commercial truck for a small business?
Leasing a commercial truck for a small business is a wise way to go.
The financial constraints of owning trucks will be too heavy for your small business to stomach. View facts about financing bad credit for box trucks!
Leasing comes at a significantly lower cost and helps you make good use of your profit instead of using it all to pay up for the truck.
Is it better to own or lease a semi-truck?
Leasing a semi-truck is a safer mode of operation when compared to buying one.
The financial obligation is significantly lower when you lease a semi-truck.
It comes with a more flexible payment plan than what you get when you decide to buy a semi-truck. Here are top semi truck lessor companies!
Can my business buy a truck?
The question of whether your business can buy a truck can be linked to how well your business is doing financially.
You must realize that purchasing a truck isn’t necessarily an asset but can be a liability.
You have to ask yourself a question; is my business ready to handle this level of expense? Is a truck at this point a liability or a profit?
Can I lease my truck to my business?
Yes, you can lease your truck to your business. Lease payments come with very low taxes.
It is a good way to make some extra cash. Nonetheless, you may also interface with some liability issues peculiar to leasing.
The decision on whether to lease or buy a truck depends on many factors, but the primary factor is the finances.
How much you are willing to spend with a negative backlash on your business should guide your decision.
Both choices come with their advantages and disadvantages.
It’s simply wise that you consider every possible concern and make the best choice for your business.