Do you want to know if you should buy or lease trucks for your trucking business? Both options are great for expanding your trucking business and operations, but they also have various advantages and disadvantages.
Depending on your needs, one option outweighs the other, but there are other things that you need to consider if you want to start a trucking business. Go now to this website to learn more. Here are the pros and cons of buying vs. leasing trucks for your trucking business.
Pros and Cons of Buying Trucks For Your Trucking Business
If you want to buy trucks for your trucking business, you have the advantage of owning them as assets, which leads to the possibility of building equity in the vehicles over time. Even when financing is paid off, your trucks are still valuable assets that can be sold or used for trade–ins. This is a major advantage in comparison to leasing trucks.
Yet, the biggest disadvantage is that buying trucks involves high upfront costs, including down payment, purchase price, and financing charges. Still, once you pay off the trucks, the ongoing costs are lower, usually limited to repairs, maintenance, insurance, and fuel expenses.
You also have greater control and flexibility when buying your own trucks. You can customize them as you wish, promote your company, and have more control regarding maintenance and repairs. Still, you also have to consider the depreciation factor. Trucks can lose value over time, and as the prime owner, you are directly responsible for maintaining them and need to consider that you will always need a budget for unexpected repairs.
Pros and Cons of Leasing Trucks For Your Trucking Business
The biggest advantage of leasing trucks is the lower initial cost. The upfront costs are significantly lower compared to buying a truck directly. Still, you need to pay monthly lease payments, but this isn’t necessarily a disadvantage. Rather, it is an advantage since you have more accessible capital for other business needs.
Apart from enjoying the predictable monthly expenses of lease payments and maintenance costs, as they are commonly part of the lease agreement, you will have better cash flow management and budget.
Another significant advantage of leasing trucks is that you can upgrade your fleet to newer trucks since lease terms are short, between 2 to 5 years. This means better access to the latest technology, safety features, and fuel efficiency.
The leasing company is usually responsible for the maintenance and repairs of leased trucks. This means limited owner responsibilities and eliminating an administrative burden or unexpected expenses. However, not all lease agreements work like this.
A big disadvantage when it comes to leasing trucks is that they often have restrictions and mileage limits or maintenance requirements. When you exceed these limits, you may have to pay additional fees. Keep in mind that you do not own the vehicles and thus do not retain any residual value once the lease ends.