Trucks: Loan, Lease or Rent?

Buying your next truck with cash, rather than financing, may sound smart to some, but determining if that’s the best solution for you is not quite as simple.  Growing your business requires investment and business opportunities sometimes present themselves unexpectedly. Using your cash to purchase assets can make it more difficult to manage unexpected events and opportunities. Here are 3 ways to take ownership of commercial equipment and heavy trucks.

Loan

A commercial truck loan is similar to a home or car loan. You make monthly payments on the truck which includes your loan interest and principal, and you own the truck once you pay off the loan.

Leasing

There are two different kinds of truck leases - capital leases and operating leases.

Capital leases are similar to loans. You make monthly payments on the heavy-duty truck and at the end of the lease term you can own the truck for a nominal amount (eg. $100). This called a lease for tax or bookkeeping purposes.

Operating leases are essentially the equivalent of renting a truck trailer for the duration of the lease.  The monthly payments will be lower than a loan. However, you will not own the truck at the end of the lease.  To purchase, you will have to pay the fair market value of the equipment at the end of the term.

Renting

Truck rentals are primarily used when the heavy truck is used for a short duration of time, such as a month. There is a lower investment in short term rentals. Renting, however costs more on a monthly basis as compared to leasing and loans.
 
Features and benefits of the 3 financing methods:

	Truck Loan	Truck Lease	Truck Rental
Features	Monthly payments for duration of loan.	Monthly payments for duration of lease.	Rental payment for duration of use.
	Own truck tractor at end of loan term.	Own heavy truck for nominal fee (capital leases) or at fair market value (operating leases)	No ownership at end of rental period.
Benefits	Initial investment depends on down payment.	Low initial investment	No initial investment.
	Predictable periodic payments.	Predictable periodic payments. Operating lease payments are lower than loan payments.	Good for users that need highly specialized equipment.
	Heavy trucks always available.	Commercial trucks always available.	Heavy-duty trucks can be rented depending on project frequency.
	Possible tax benefits.	Possible tax benefits.
	Good for those with skilled, in-house maintenance teams that can increase life of truck tractors.	Option to buy or return at end of term.
		Good for those who need to upgrade to latest commercial truck.

Financing, leasing and rentals each have their own benefits. All helping you manage cash flow and select a highway tractor that is appropriate for the cost, scope, duration and technical requirements to meet your own specific needs. For additional advice and recommendations, speak with a Brandt financing specialist or read more about financing options and try our payment calculator to get a rough estimate instantly.