1. Leasing VS Buying Trucks and Trailers
Should your business lease or buy equipment? The answer depends on your situation. Leasing equipment
can be a good option for business owners who have limited capital. Most companies that are just starting out
are limited on their cash on hand. It is a good idea to try to keep as much of these reserves for future
operating income. There are also unforeseen expenses that might happen down the road. Keep in mind to
be prepared for these types of expenses before they arise. As gas prices rise and fall, this is an expense that
really make a difference in your bottom line. Operating a business can be very expensive and saving these
funds is important to the success of your company. With commercial truck finance, you can make low
monthly payments and save more operating capital. Leases are also fairly easy to obtain and have flexible
terms. Commercial truck finance companies can work with you to get the right fit for your company.
When considering the option of leasing a commercial truck, VS buying, many people shy away from this
option of leasing due to the stigma associated with leasing personal vehicles. However, a commercial truck
lease is different than a personal vehicle lease in many ways. Most personal vehicle leases are close-ended
which puts limitations on the things such as the miles the vehicle can be drive, the uses for the vehicle and
wear that the vehicle may sustain. Most commercial leases, on the other hand, are open-ended which allows
the business the ability to use the vehicle however and whenever it is necessary without penalties at the end
of the leasing period. You may not be required to put down money and if you do, it is minimal compared to a
purchase. Lease payments are generally lower than a purchase as well, and again, saving you that pocket
cash. Your monthly costs are predictable and lease payments are deductible.
Specialty truck finance like farm equipment for example may offer incentives in the form of cash allowances.
These cash allowances can be significant enough to be able to use to your advantage. Manufacturers will
often offer discount programs or programs designed for fleet owners who fall under a certain criteria.
Commercial truck leasing companies can help you make your decision as to what benefits your business
more in the long run depending upon your goals.
Purchasing a truck requires the business owner to put the truck on the balance sheet as an asset and any
loan used for purchase becomes a liability. The business owner has all the risks and benefits of ownership
with a purchase. Owners can depreciate the purchase price less the estimated salvage value over the useful
tax life of the vehicle, with is typically five years. Business owners deduct interest paid on any acquisition
loans. The Internal Revenue Service allows taxpayers to take a section 179 deduction in the purchase year,
which offers the taxpayer the ability to deduct all or part of the truck purchase immediately.
Besides negotiating a lower selling price, finding the best interest rate loan and other common ways of
saving money on commercial truck purchase, you will also be able to take advantage of the many business-
related tax incentives that your state government and the federal government offer for vehicles that are used
in the business.