Buying vs Leasing

BuyingvsLeasingA reader recently wrote to me...

“We need to acquire 3 trucks and trailers, we are looking at used and need to know if it would be better to buy or lease. Thanks for you help.”

There are pros and cons to each. Buying vs Leasing has been debated for as long as I can remember. There are many factors when deciding between buying vs leasing including taxes, maintenance, length the equipment is expected to be in the fleet, leasing companies driver requirements and many more.

The fast answer is buying used equipment is best. In the long run it gives you more profitability and versatility. In the short term you may (but not always) have a greater out of pocket expense. However, many companies choose leasing over buying to operate new equipment for a lower cost.

Pros when considering Buying vs Leasing:

Buying Used                                          Leasing

1999 and older exempt from ELD mandate New (or newer) equipment
Ability to modify truck to improve profitability Maintenance support from leasing company
When paid for, no more payments Lease payments tax deductible
Lower insurance costs Loaner equipment during major repairs
Ability to resale when replacing equipment

Cons when considering Buying vs Leasing:

Buying Used                                          Leasing

Tax deduction for only 3 years Higher long term cost
No warranty or maintenance support Leasing company may require to approve drivers
Hard to locate the equipment to meet your needs Will be required to meet ELD mandate
No recovery of investment (resale or trade in)

At the end of the day, the question of Buying vs Leasing has always been an easy decision for me. I choose to buy. Being in trucking for the long run means planning long term. The best way to be profitable in trucking is to plan to succeed. That includes everything from making your truck as profitable as possible with modifications or after market truck parts, taxes, fuel and so much more.

Posted by Joel on Feb 24, 2016