Buying a truck costs a lot of money; the expense is great, even if your trucking company has a thriving business. When you are considering adding a truck to your fleet, you have two options; you can buy the truck outright or you can lease it. What should you do? There are advantages and disadvantages to each path that you take.
When you take out a loan, the money is used to purchase the truck. When you lease, you are paying to use the truck. There are several different types of leasing agreements that you might enter into. However, in general, your truck lease looks at two numbers: the cost of the truck and the value of the truck at the end of the agreement. The lease takes care of the difference between those two numbers.
When you buy the truck outright, it belongs to you when you are finished making the payments on it. However, when you lease the truck that does not happen. You may have the option to buy the truck if you’d like; you will need to spend an additional sum of money to do that. Some leases let you trade the truck in for a different one as well.
The type of lease that you have makes a difference. For example, a closed end lease often costs you more in the end. You may also have to pay money if you exceed a certain number of miles or if you put too much wear and tear on the car. In addition, there may be other money that you owe with a lease; you might have to pay a security deposit, for example.
There are a lot of choices when it comes to leasing a truck, but it may not be the best situation for you. When you have a lease, your cash flow could be affected, among other things.
Usually, during truck sales, you have to take out a loan and then pay that loan back over time. If you have a down payment, the loan amount will be reduced. The amount of time that you have to pay the loan back is set ahead of time, and you have regular payments during that period. Interest is included in those payments. Buying is different from leasing because there are not as many expenses involved. In addition, it adds equity to your business. Once you are finished making payments, the truck belongs to you.
When you lease a truck, your equity in the vehicle does not go up. When you buy a truck, it does. When you are done paying for the vehicle, you have the option to do whatever you want. For example, you can find a buyer and take the money that you make to purchase another truck.
Whether you lease or buy is up to you and what you think is best for your company. Cash flow is obviously something that needs to be considered as well. If you want to make your fleet larger, trucking factoring can assist you in reaching your goals.