Figuring out whether you should lease or own your commercial truck fleet can be a tricky choice. Some choose to mix both options, but some would rather pick one. Many factors come into play when making such a decision. Take a look at the pros and cons of leasing vs. buying trucks to help you decide what makes the most sense for your business.
Pros of a Truck Lease
About sixty percent of private fleet operators choose to lease their vehicles. There are several advantages to this.
Leasing Offers Financial Flexibility
Fleet operators can enjoy improved cash flow and a predictable budget when leasing their vehicles. This is because operators can obtain trucks without dealing with huge upfront costs and the problems that come with credit. With leasing, there are lower monthly payments as well. Apart from that, the fleet will enjoy the benefits of scheduled, guaranteed maintenance. To top it all, there’s the 100% tax deductibility that comes with leasing.
No Hidden Ownership Costs
There are many hidden costs associated with owning trucks. This includes ongoing maintenance and repairs, missed deliveries, and many administrative tasks. If you are leasing your trucks, you won’t have to deal with these costs, as the lease agreement will cover them. With ownership, there’s also the problem of unexpected maintenance costs. Even though there will be scheduled preventative maintenance, trucks can still break down, and they will need to be fixed if operations are to continue.
Access to New Technology and Expert Support
With quick changes in technology nowadays, trucks can become obsolete faster. That is one of the problems of owning trucks. On the other hand, with leasing, trade cycles are shorter, and there’s always the option to upgrade to newer technology without any hassles. On the other hand, for truck owners to upgrade, they would have to sell their vehicles and buy new ones, which is not always an easy process.
Leasing Helps Fleet Operators Focus on What They Do Best
Leasing offers the fleet operator many conveniences, which allows them to dedicate their time towards improving their business model. For instance, instead of spending a lot of time handling costs and hassles associated with maintenance, compliance issues, permits, taxing, and licensing, the fleet operator will find ways to make the business more profitable. This leads to better business models and more efficient operations. That way, leasing also reduces the risk of fines due to safety violations.
Disadvantages of Commercial Truck Leasing
There are a few cons associated with leasing vs. buying trucks. Here are two of them.
Leasing is a lot like renting trucks. Therefore, you won’t have the freedom to do whatever you want. This means you can make any modifications to the trucks because you don’t own them. The only thing you should do is keep the trucks in good condition so that they may be returned to the truck owner in good shape.
Possible Restrictions on Annual Mileage
Some truck leasing companies impose mileage restrictions which you will be obliged to observe. This can be a deal-breaker for operators that are involved in long-distance transportation. If you exceed the agreed-upon annual mileage, there may be some penalties involved depending on the lease terms.
Leasing trucks is a good option, depending on the terms of the lease contract. Overall, it is way more convenient than owning trucks as it takes a lot of the burden and responsibility of truck ownership away—all you need to do when leasing trucks is to find a good agreement and focus on improving your business model.
Let Efficiency help you find the right solution for your business. Contact us today to learn more!