Which Is Better? Leasing A Semi-Truck vs. Buying

Which Is Better? Leasing A Semi-Truck vs. Buying

If you are a truck driver, you may have wondered whether to lease or buy a semi-truck and which is right for your business.

There are advantages and disadvantages of both, and the best decision ultimately depends on your financial situation, personal preferences, and career goals. In this article, we will compare the two options and provide helpful information so you can make an informed decision.

Leasing a Semi-Truck

Leasing a semi-truck allows owner-operators to operate newer vehicles without having upfront costs when you purchase one. Newer vehicles can provide cost savings to your business including:

  • More fuel efficient
  • Latest models have more technology to improve safety
  • Save time, money, and energy in maintenance problems

Leasing is essentially renting a truck for a fixed period of time. You pay a monthly fee to a leasing company and return the truck at the end of the lease term. Some leases may give you the option to buy the truck after the lease expires.

How Much Does It Cost to Lease a Semi-Truck?

The average cost to lease a semi-truck varies depending on the type of truck and where you lease from. Lease payments average between $800 a month for a used truck and up to $2,500 a month for a new truck.

Pros of Leasing a Semi-Truck

1. Lower upfront cost

When you lease you pay little to no money down which can be beneficial if you are on a tight budget or credit. When you buy a truck, you may be required to put down a large amount and meet loan approval.

2. Shorter commitment

If you are new to the trucking industry, a lease may be better than purchasing. You never know if you may switch careers and if you purchase a truck, then you would be subject to the market which may or may not be favorable when selling a truck.

3. Less maintenance

It makes sense that when you have a newer vehicle, you likely will be focusing on maintenance rather than buying an older truck and worrying about repairs which can eat into your business capital and cost you more money.

Disadvantages of Leasing a Semi-Truck

1. No ownership

When you lease a truck, you don’t own it and you can’t customize it to your liking. The leasing company will have rules which you have to follow including mileage limits, maintenance schedules, and proper insurance requirements.

2. The potential of a higher long-term cost

At the end of your lease term, you may have the option to purchase the truck at a reduced price. If you decide not to purchase the truck, you don’t build any equity or potential resale value.

3. Limited tax benefits

Leasing a truck may limit your tax deductions since you can only deduct the lease payments as an expense and not the depreciation or interest costs. If you buy a truck, you can deduct these costs and other expenses like fuel and maintenance.

Buying a Semi-Truck

Buying a truck means you own it outright or finance it with a loan. You pay the full price plus interest and fees over time and have the ability to sell whenever you want.

Pros of Buying a Semi-Truck

1. Ownership

Purchasing a truck gives you full ownership which means you can customize it to your liking and business needs. You can run your truck how you want without having to worry about breaking a contract.

2. Lower long-term cost

Buying a truck could save you money in the long run especially if you keep the truck and sell it for a good price. Buying allows you to build equity and resale value over time.

3. Owning and operating your own truck

You can own your own truck and be leased on to a large fleet which means you become an employee. You can also own your own truck and have your own DOT authority. By doing so allows you the flexibility to work on your schedule and haul the loads you want to haul. Owning and operating your own company does come with a lot of financial responsibility but can be very lucrative if done successfully.

Disadvantages of Buying a Semi-Truck

1. Higher upfront cost

Buying a truck requires a significant investment upfront which can be difficult if you are limited on budget.

2. Maintenance and repairs

Unlike a lease, if you own your truck, you are responsible for repairs and making sure the unit is road ready. This requires constant capital to ensure no down time and keep your business profitable.

Is Buying or Leasing a Semi-Truck Right For You?

Ultimately, there is no right or wrong answer. Leasing or buying a semi-truck will depend on which factors matter most to you and where you are in your journey.

No matter what decision you make, Russell Agency is here to help provide you with the proper insurance protection at competitive rates. Get started with a quote today and protect your trucking operation.