Whether you are a new owner-operator, a well-established fleet owner, or an asset-based freight broker, you know that expansion can increase your profitability. With more trucks, you can reap certain efficiencies and economies of scale and be able to work with larger shippers. Yet, what is the best way to increase your fleet, whether you are adding one truck or a dozen? Should you invest in buying power units and trailers or is leasing your best option?
Conventional wisdom – and our parents and grandparents – may have told us that buying is the economical way to go, whether you need a house, a car, a couch, or whatever. The security of building equity and ownership has a certain appeal. If you can afford the down payment and the monthly mortgage bills, you can end up with a free-and-clear house in 30 years.
However, when it comes to building your fleet, buying is not always better than renting.
Leasing your trucks may make sense for a variety of reasons. One survey indicated that more than 80% of small and medium-sized companies across a number of industries currently lease their equipment. In the trucking industry, where new and used truck prices can be almost cost-prohibitive, leasing can be an affordable alternative.
Let’s take a look at some of the factors to consider in your decision whether to lease or buy:
- Leasing lets you save your cash and use it for other ways to grow your business
- Monthly lease payments could be tax-deductible
- Changing technology and emissions standards mean that older equipment may not be compliant
- Leasing brings flexibility to your business during life changes and different business cycles
- Owning a truck means that you are responsible for maintenance, breakdowns, and repairs
- Selling a used truck can be a time-consuming, resource-consuming effort
You have many decisions to make on a regular basis for your trucking company and the leasing vs. buying choice is an important one. Another important question is a daily concern: where are you going to find your next load?
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