If you’re struggling to figure out whether it’s better to buy or lease your next big rig, you’ve come to the right place. Some businesses might even be trying to decide whether to buy or lease an entire fleet to kick off their new venture. Each business should consider a few key things before deciding on which truck finance option is right for them. Financing equipment for your business is one of the single most important decisions you will ever make and need never be rushed into. Australia has a fiercely competitive trucking industry, so your decision will have a true impact on your bottom like.
If You Buy
When you buy a truck, you add it as an asset. It’s yours. That means you’re free to treat it how you will and it will eventually begin accruing equity over the years, adding to your flexibility in financing. This can mean the world when it comes to expanding your business when the time arrives.
The GST input tax credit is one tax incentive for buying, but you’re going to lose 20% in resale value with a buying arrangement. Maintenance is also another big deal. Since you’ve purchased the vehicle, maintenance is entirely up to you. You won’t be trading it in at the end of the year or 3 years, meaning that if any costly maintenance occurs, you’re still stuck with a long-term finance arrangement that, yes, amounts to ownership, but if the vehicle quickly deteriorates, ownership is less appealing.
The key is to remember that if you buy it, it’s yours! So take great care to pick a fleet of trucks that are going to serve you well and that has a good reputation for durability. If you do, maintenance costs will be lower. This sometimes means taking out loans so that you get a better truck. Work our your truck finance through a truck finance calculator.
If You Lease
Leasing won’t amount to ownership but it gives you more flexibility about the kind of trucks you can lease over the years. If it’s a short-term lease, you don’t get stuck with the maintenance bills when they come in because the truck will still be under warranty during the lease. This means reduced maintenance fees AND it means that you have the flexibility to lease another truck once the period is up. And there’s always the hope of ownership if you find a great truck that you don’t want to part with. You just need to refinance into a buying arrangement at the end of the lease. Insurance costs will also be lower for a leased truck.
Leasing doesn’t result in ownership and you don’t have any equity in a leased truck, but what you do have is flexibility to lease another truck at the end of a short period rather than entering into a long-term financing arrangement.
Which do you choose?
If flexibility is something that’s important to you, and you want to save money on maintenance, fuel, and insurance, leasing is the way to go. If you want to own the best fleet of trucks in Australia, buying is the ONLY way to get the job done. The extra costs will more than make up for themselves in some of the tax benefits. Both of them are terrific options, and a financial adviser can sit down with you and analyse your situation so that you are confident you’re making the right choice for your trucking business.
This will be one of the most important decisions you’ve ever made for your business. After all, the vehicles themselves ARE your business. Your bottom line will depend on which decision you make. So before diving in head first, contact a great financial consultant and make a more confident decision.