Trucks are an integral part of many businesses. From large national retailers to small family-run businesses, trucks are essential for transporting goods, materials, and merchandise. But your business needs may change from time to time, depending on factors such as demand and supply, sales, orders, and so forth.
This begs the question, should you lease trucks for your business, or is buying a smarter idea? Well, the truest answer to this question is that it depends on various factors surrounding your business, including operational costs, convenience, and ultimate value, just to name a few. But there’s apparently more to it than meets the eye.
If you run a business that depends heavily on trucks, read on to determine which leasing and buying would be the better option for you.
Which Businesses Depend on Trucks?
Needless to reiterate, many kinds of businesses depend on trucks in various ways for their day-to-day operations. For instance, construction companies and contractors rely on trucks for hauling materials, tools, and equipment to and from job sites.
Delivery businesses utilize trucks for picking up and dropping off packages, mail, and other items. Many restaurants use trucks for deliveries of food and supplies. Retailers use trucks for stocking their shelves, and bakeries use them for making deliveries.
In addition, many farmers and agricultural businesses use trucks to transport livestock, crops, and other agricultural products. Trucks are also used for waste management and garbage collection.
In short, trucks are an essential business asset for many businesses, and depending on your needs, both leasing and buying would be the better option in certain scenarios.
Pros and Cons of Buying Vs. Leasing Trucks for Business
There are pros and cons to both leasing and buying trucks for your business. By understanding the pros and cons of each option, it becomes easier to make an informed decision.
Leasing Business Trucks
Leasing trucks for your business basically involves approaching a leasing company or dealership and negotiating a contract to lease the vehicles at an agreed-upon price. This could be a fixed monthly payment that may also include servicing and maintenance.
As opposed to buying, leasing trucks for your business can be a great way to keep your operations running without actually having to bear the massive costs of buying a new truck.
Pros
Lower upfront costs:
Leasing typically requires a smaller down payment or no down payment at all, which can be beneficial if you don’t have a lot of cash on hand. Leasing trucks can help improve your small business because, oftentimes, it also allows you to pay a fixed monthly amount, which can make budgeting easier.
Flexibility:
Depending on the leasing company, you may have the option to choose from a variety of trucks and services, such as fuel-efficient models, customizations, and add-on services to make your truck ready for business. Leasing also gives you the ability to upgrade to a newer model at the end of the lease term, which can be beneficial if you want to keep up with the latest technology.
Tax Benefits:
Leasing a truck can have tax benefits for your business. Depending on your business, you may be eligible to claim a tax deduction for the lease payments for your trucks. However, this is often more beneficial for businesses whose profitability doesn’t exceed $100000.
Overall, leasing trucks for business can be a great way to access the latest models and technology without breaking the bank.
Cons
Limited ownership:
When you lease a truck, you don’t actually own it. This means that you don’t have the same level of control as you would if you owned the truck outright.
Documentation:
You may also need to provide a down payment and/or security deposit and meet other requirements such as a credit check, proof of insurance, and other documents.
Higher Overall Cost:
While the upfront costs of leasing may be lower, you will likely pay more in the long run compared to buying a truck outright. This is because you are essentially paying for the use of the truck over the lease term, rather than paying to own it.
Buying Business Trucks
Especially if you’re a focused and steadily growing business that depends on trucks for daily operations, buying can be a great option for various solid reasons.
Pros
Ownership:
When you buy a truck, you own it outright. Besides giving you more control over how you use it, buying a truck also grants you the ability to make any modifications or upgrades you see fit.
Potential Cost Savings:
While the upfront costs of buying a truck may be higher, you may save money in the long run compared to leasing. This is especially if you plan to keep the truck for a long time.
You Can Buy (And Sell) Used Trucks or Buy Wholesale:
While buying a truck for business is cheaper in the long run compared to leasing, buying a used truck lets you make savings on your upfront costs. And if your budget is a bit intact, buying trucks wholesale can realize you even more savings.
This is often a decent bargain since you can always convert your business trucks into cash by selling them online, at auctions, to dealerships, or to other willing buyers. In other words, buying trucks for your business provides a considerable amount of financial cushioning. Compared to leasing, it CAN add a lot more value to your business.
Cons:
Higher Upfront Costs:
Buying a truck typically requires a larger down payment, which can be a challenge if you don’t have a lot of cash on hand. In most cases, small businesses may have to borrow so they can comfortably afford the purchase, especially if several trucks are needed.
Depreciation:
Trucks, like all vehicles, depreciate over time. This means that you may lose money on the truck if you decide to sell it down the road. However, it’s still better than paying for something you will never own, right?
Maintenance:
When you own a truck, one thing is for sure. You will be responsible for all maintenance and repairs, and this can be costly in terms of both time and money. Nonetheless, it might be worth it considering the benefits you stand to gain.
Ultimately, the decision between leasing and buying will depend on your business needs and financial situation. It’s important to carefully consider the pros and cons of each option, as well as the impact it will have on your business before making the final choice.
It is also advisable to consider consulting with a financial advisor or accountant to determine the best choice for your business since they will have a better perspective on the money side of things.
