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12
Jun

Should You Buy or Lease a Trailer?

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Many professionals will soon discover that owning a trailer can yield great dividends sooner rather than later, as trailers are a staple in many different industries, including the construction and agriculture industries. In fact, many business proprietors will end up investing heavily in a trailer, or several trailers, in order for them to remain competitive, expand their enterprise, and/or to offer their customers superior service.

Should You Buy or Lease a Trailer?


However, some business professionals will decide to take a different route, and will opt to rent out a trailer, chain of trailers, or other such vehicles instead; leasing them for a predetermined period of time, and then returning the vehicles when they are no longer being used, assuming no long-term maintenance expenditures were incurred. Here, we will help you determine if it is in your best interest to buy or lease a trailer or chain of trailers, weighing the pros and cons of both options.

Assessing the Final Cost of Ownership

Imagine a scenario where a business proprietor needs to gain access to a highly specialized trailer so that he can fulfill an order for one of his most loyal customers. Now, let us imagine in this scenario that he would have to spend $2,800 in order to purchase the specialized trailer, but would only have to spend $650 to rent out the trailer for the week.

As such, it may seem, at least on the surface, that going with option B would be best, as it would cost the business owner significantly less to do so. However, if a successful order leads to subsequent orders that also require the use of the specialized trailer then the business owner would need to dole out $650 or more in order to fulfil future orders in perpetuity.

Hence, things are not so black and white as far as buying vs leasing trailers is concerned, as the business owner will have to assess their own financial needs and options, as well as the service requirements and demands of their customers, in order to determine which option is best for them.

Thus, if you plan on using the trailer on a daily or semi-daily basis to fulfil orders then trailer ownership may be the better fit for your company, even if the upfront cost will be much higher than leasing the trailer. However, if you plan on only using the trailer on occasion then perhaps renting on a need-only basis may be best. Also, generally speaking, most business owners will benefit more from renting versus buying, as renting means the owner won’t have to worry about the long-term costs of ownership, which can run in the thousands.

The (Hidden) Costs of Ownership

When most people think of owning something, they think of simply buying an item and moving on. However, owning a trailer is a little different than purchasing, say, a stake, as the owner of said trailer will need to keep the trailer in optimal condition in order to fulfil orders in the long-term. In other words, if you decide to invest in a trailer instead of leasing then you will need to spend thousands of dollars annually in order to maintain the trailer and repair any damages that it will incur while on the road.

From wear and tear to repairs, to inspection fees, warranty coverage, and even possible upgrades down the line, there are many additional costs that are involved with trailer ownership than the upfront cost to buy one.

However, if you were to choose the rental option then you will avoid the costs associated with repairs, maintenance, insurance, upgrades, inspections, and more. Many business owners will only need to use their trailers from time to time, and, as such, it makes more financial sense to lease their trailers than to pay significantly more upfront to buy them, and then spend thousands more to maintain and repair them over the next several years.

Furthermore, new business owners, such as those who own startups, will benefit far more from renting versus buying, as renting will allow them to quickly bridge the gap to their clients in order to get a good head start. Also, if you would like to own a line of trailers one day, then you can use renting as a good stepping stone, as hard work and diligence will usually lead to trailer ownership in the foreseeable future; which will also allow you to invest in your company’s growth and have full control over your trailers.

Additional Advantages of Leasing Trailers

By leasing your trailer you will be to write-off your trailer payments as a pre-tax expense, assuming you are able to procure an operating lease. As such, you will save large sums of money when tax season arrives. Another benefit of leasing is that you will only have to deal with fixed payments over a fixed term: This is in stark contrast to obtaining a loan from a financial institution like a bank, where you may be subject to ever-changing interest rates, which may mean increased payments down the road.

One of the biggest advantages of fixed payments is that they will allow you to plan and manage a monthly budget that you know you can handle for the foreseeable future instead of having to worry about interest rates suddenly spiking unexpectedly.

Yet another advantage of leasing is that credit is not the be all end all of obtaining financing. In other words, when a leasing company underwrites a submission file they will look at multiple factors that go beyond a credit history check, such as industry experience and asset type, allowing for borrowers to have more opportunities to obtain the financing that they require.

Truck Loan Center

If you are interested in leasing a trailer then we can help.  At Truck Loan Center, we specialize in truck loans and heavy equipment financing. We are a full-service trailer leasing company that offers our clients unrivalled trade-ups, repair loans, refinancing, sales/leasebacks, and more. To learn more about our flexible leasing solutions for trailers, bulldozers, commercial trucks, and other construction and demolition machinery, please visit our website or give us a call at 1-866-230-0094.

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