Alright, so you’re thinking about becoming an owner operator or independent driver, that generally comes with getting your own truck. However, have you carefully considered all of your options from buying a brand new truck, buying a used truck, or maybe even leasing a truck?
The Benefits of Leasing
Sometimes leasing gives truck drivers a break because buying a trucks is just outright expensive. For a reliable truck, that's older and used the costs are about upwards of $40k. Plus, to get a loan for that bad boy then you need good credit, what happens if you’re rejected or if your credit causes you that have a higher monthly rate?
Well then, you can lease. Leasing provides smaller down payments, and generally provides you with lower monthly rates, even though some leasing companies have step up payments, which means after a period of time the monthly payments will go up. Also, along with lower monthly rates leasing your truck may provide you with more tax deductions.
However, don’t get discouraged, if you want to have your own truck one day, you can do it. Simply keep driving a company truck for a while and save up some money while cleaning up your credit or check out leasing options, some of which include leasing to own.
Leasing is basically agreeing to pay a company a fixed monthly rate in exchange for the ability to use their truck for a set amount of time. You are bound by a contract, that generally lasts about three years or so, which is much shorter than the commitment of buying a truck. At the end of the agreement, you can return the truck, lease it again, or work towards owning it. Returning the truck early or breaking the lease will come with fines and consequences.
When you lease a truck you can get the picture of what it would be like owning your own truck and the extra expenses that come along with it. For example, you’ll be responsible for the maintenance repairs big and small on your leased truck. Plus, all of the insurance that comes with it, like cargo insurance, health insurances, and more.
Luckily at the end of the lease agreement if you see that you actually don’t want to own your own truck and miss the financial comforts of driving a company truck you can simply return your truck. Leasing is much more flexible than owning a truck.
Technology is moving quickly these days. Every time you buy the latest, most innovative truck, something more advanced rolls out about an hour later. With a leased truck you can more quickly upgrade to more advanced and more fuel efficient trucks on a regular basis.
If you end up buying a truck and then realize it isn’t the correct career move for yourself, then you could lose out on a lot when you sell the truck due to the depreciation of its value.
However, you might enjoy the freedom that comes with leasing. It gives you more of an ability to quickly change companies if need be. Plus, you can choose a truck that’s best suited for your personal preferences.
Is Leasing Right For You?
However, you should speak with an accountant or financial advisor first to determine which move is best for your career plans and current financial situation.
For more trucking advice keep checking back with ExpressTruckTax.com and be sure to share your thoughts and experiences with leasing a truck in the comment section below.