Leasing Equipment: What Trucking Fleet Owners Need to Know
Whether your trucking fleet has a dozen or a hundred trucks in it, those machines are an invaluable asset for your company. They enable you to live up to your service promises and drive your business toward prosperity. However, when your old trucks need constant repair or you want to expand, you can find yourself facing a serious financial burden. You might want to consider leasing equipment instead of buying it. Here is what you need to know about leasing equipment:
A Smaller Down Payment Is Required
When you buy equipment, especially big-ticket items like a fleet of semi-trucks, lenders often expect a large down payment — up to 25 percent in some cases. This can put a damper on your cash flow and make it more difficult to meet your existing financial obligations.
When you lease your new trucks, or whatever other equipment you have your eye on, you can expect to be required to give little or no down payment. This frees up your cash flow and frees you from the pressure of having to make a large initial payment on your new assets.
The Monthly Payments Are Smaller, Too
Leasing equipment often comes with significantly smaller payments than if you bought and financed the equipment. Your monthly budget will be easier to manage.
If your business has poor to mediocre credit, the nature of a lease with its smaller payments may make you more likely to be approved for your new equipment.
Leasing Makes It Easier to Update
How is your old fleet of trucks doing? Maybe they need constant repairs. When this happens, it can slow down your deliveries and make you feel like you’re being nickeled and dimed to death. You might want to invest in new vehicles, but you hesitate to go through the troublesome process of selling your old equipment.
With a lease, you do not own your trucks. Therefore, when the lease ends, it is a breeze to update. Your drivers will have the latest and most efficient models at their disposal.
Other Advantages of Leasing
Leasing equipment comes with other advantages as well. For example, it may even be able to help you when the time comes to file your taxes. You can usually treat your lease payments as pre-tax business expenses so you’ll end up owing less to Uncle Sam.
Another perk of leasing is that since you won’t use existing bank credit for it, you keep your credit lines open. You’ll have something to fall back on it if necessary.
Is it time to give your fleet a new shine? Why not give leasing a try?