If you’re among the 90 percent of buyers who can’t afford to pay cash outright for a truck, one of the most basic decisions you need to make is whether to buy or lease. Each option has advantages and drawbacks.
PURCHASING. When you take out a loan and arrange to finance a truck, you are buying the vehicle and will own it at the end of the contract. A loan requires monthly payments, usually over three to five years. Your monthly payments include principal and interest. With many finance contracts, you pay more interest per payment in the early years, and pay down more of the principal per payment in the later years.
LEASING. Leasing is similar to renting. You pay for the use of a truck that is not actually yours. When the lease is up – usually in three to five years – you do not own the truck as you would if it were financed; you return it to the lease company. However, you can elect to purchase the truck at a predetermined price. This residual value of the truck is agreed upon in the original lease document. Leasing models can vary greatly, and differ from buying through a carrier’s lease-purchase plan.
TRUCK LEASING TIPS
DEFINE YOUR BUSINESS
Most potential owner-operators wouldn’t dream of going to a carrier without already having a truck. Any reputable carrier representative will be eager to talk with you and help you understand his operation before you own the truck. As you talk with potential carriers, further outline your business model. This is a great opportunity to spec the right truck for the work you are planning.
