You would like your business to accelerate towards growth. Have you asked yourself: what does my new operating needs require? There are plenty of truck trailer types on the market: enclosed, refrigerator, flatbed, and step decks. Although these trailers are different, they all have a glaring similarity: They are expensive.
Here, we’ll discuss 6 reasons why you’d want to consider leasing a truck trailer rather than renting or outright buying one.
Adjusting Your Trailer Fleet Based on Your Operation
In business, you have to deal with plenty of uncertainties.. What if your customer base changes to needing all refrigerated products? How about a spike in fuel prices and now you need to highly consider fuel efficiency and minimize operational expenses until prices fall? Thankfully, if you lease a trailer, there is much more flexibility in upgrading or trading than buying a fixed asset. Lease terms can be made or adjusted to your company’s needs.
Experiencing Technological Upgrades
By leasing, you can reap the rewards of technological upgrades at a lower price. For example, a refrigerated trailer has several components to consider. Rather than being stuck with an older, inefficient model, you can take advantage of production and monetary savings from a newer, energy-efficient trailer. If you’re requiring a replacement trailer for one you own, you would have to try to sell it at a fraction of what you paid for it. Thankfully with leasing, it’s easy to upgrade your trailer at almost any point during the term. It’s a huge business advantage to release your current trailer for an upgraded model.
Improved Trailer Purchasing Power
Have you ever seen equipment that would be perfect for the job but it’s financially out of reach? Leasing can enable you to afford the best trailer for the task at hand. If you have dated, obsolete equipment, it can cost your operation money and reduce overall efficiency. On the surface, using or purchasing a dated trailer has lower short-term costs. However, if you calculate extra hours involved, possible reduced load capacity or spoilage, and downtime due to breakdowns, your initial cost savings can quickly become a financial burden.
Conserve Cash & Lower Payments
If you’ve looked at trailers to outright buy, you know it’s a hefty investment to make. It takes a significant amount of cash to purchase a truck trailer. The squeeze on your company's cash can cause your business to be inflexible and less adaptable compared to your competitors. Don’t forget that your competitors in the industry most likely have the opportunity to lease as well.
Leasing can help you. By leasing a newer truck trailer, you’re putting less financial risk on the asset. By having a larger pool of savings, you can be more prepared for the unexpected. The more capital you have, the more security and freedom you will have to make better decisions. Leasing payments are steady, predictable and measurable on your company spreadsheet, allowing you to plan more effectively.
Simpler Bookkeeping & Tax Deductions
If you’re leasing, you can write off the entire amount as a business expense. Even when you’re in a lease to own agreement, the lease term’s amount is tax-deductible. If you have an accountant or accounting team, this will reduce and simplify their workload. The same goes for you if you tackle your own business taxes. It’ll have a greater effect on your tax return compared to purchasing a trailer.
When purchasing a large capital asset, it cannot be written off entirely right away. They amortize or depreciate, every year. There’s a limit on the amount you can claim as a tax write-off, so you won’t see the entire amount deducted for at least 5 years typically, maybe more. Leasing will avoid this common problem.
Avoid Trailer Maintenance Costs & Storage Fees
Trailers are difficult to store and require routine maintenance to avoid breakdowns. If you buy a trailer, it’s your responsibility to store it in your yard, provided you have the space. Additionally, any breakdowns and repair costs lie solely on you, the owner.
Leasing a truck trailer can take the burdens of repairs and storage off you. During a lease, repairs and maintenance can usually be added to the monthly charge. This way, the maintenance cost is planned in advance and breakdowns become less frequent. Some lessors include maintenance in the price package, just make sure to ask them about the lease term details.