Lease Vs. Own. Which Is Right For Your Business?
Owner/operators are in the position to make important business decisions that impact their future success. Your unique situation and goals play a large part in your decision to buy or lease a semi-truck. Ultimately, it comes down to the type of truck you want and how you prefer to spend your money.
Buying a Semi-Truck as an Owner/Operator
The average price of pre owned truck is well over $75,000. Do you have the capital to make this purchase? If not, take a look at financing. Either way, you’ll start to accrue equity. The purchase can also be used as a tax write-off; talk to an accountant or tax professional before you make the purchase to understand all the tax considerations. Additionally, you’ll save money on insurance as rates are often cheaper than those for leased vehicles. If you have good credit and the truck is not terribly expensive, you may not have to make a down payment, depending on the company issuing the loan.
Leasing a Semi-Truck as an Owner/Operator
If you’re not able to buy your truck or you want to limit your financial risks, leasing may be the best option. A lease contract usually lasts anywhere from 3 to 5 years. Once your agreement is over, you’ll return the truck, and you can start another lease on a new truck. If you choose to break your lease before it ends, you’ll pay a penalty; the amount of the penalty is a lump sign that’s stated in the contract.
What Should You do?
Commitment is the biggest difference between the two options to purchase or lease a semi-truck. A conventional lease can be a short-term commitment that may provide the freedom to walk away from your truck. Though you’ll spend less money upfront, you won’t build any equity. Overall, you may pay more money than if you were to buy it outright. Insurance is typically higher on a leased semi-truck than one that you’ve purchased. You also can’t make it your own by modifying or updating it the way you would if you owned it.
Buying or leasing a semi-truck is ultimately a financial endeavor. But it doesn’t end there; it also comes down to your goals and long-term vision for yourself as an owner/operator.