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Determine your best method for acquiring a truck
It’s no secret that affording a new tractor has become more complicated for owner-operators and many smaller carriers over the past decade as equipment costs have risen dramatically. Nonetheless, as acquisition patterns change, one of the most basic decisions you need to make remains the same: 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 four to seven years for new power units. 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 often agreed upon in the original lease document. Leasing models can vary greatly and differ from buying through a carrier’s lease-purchase plan.
Traditionally, few owner-operators take this route toward acquiring equipment, though there’s evidence that with the rising cost of new trucks, it’s becoming more common. Maintenance contracts included as part of the deal, where the leasing company assumes responsibility for most maintenance, could be good insurance against emissions-system issues seen in 2007 and later model-year diesels.
