One question that truckers often ask themselves – should I buy or lease?
There are many advantages to owning your own trailer as well as some downsides. This article will cover what some of the pros say about the benefits and disadvantages of trailer ownership, what to expect financially, and at what point you or your company should consider buying.
“The number one benefit of buying a trailer is CSA (Compliance, Safety, Accountability) compliance because you are in control of it,” Todd Amen, president and chief executive officer of the owner-operator financial services company ATBS said. “You take care of it and you know what you have. That’s not true when you are pulling another company’s equipment.”
Research by Overdrive shows that 93% of independent owner-operators own their trailers, as well as 48% of leased owner-operators.
Why is it so popular to own your own trailer? Because of the money!
“A leased owner-operator owning his or her own trailer,” Amen stated, “can expect to earn 3 cents to 12 cents per mile more, with the average being about 6 cents. That equates to a $350-$800 increase in monthly revenue.”
While buying a trailer almost immediately increases revenue, there are reasons why many truckers decide to continue to rent their trailers. “Many people think of ownership as paying to own something. However, business owners need to think of how much money it costs them to keep the things they own in serviceable condition,” reported I69 Trailer Center.
Despite the increased revenue, a trailer not only has a high initial cost, but it is not cheap to maintain either. “The owner must consider yearly maintenance, repair costs, inspection fees, wear and tear, warranty coverage, future upgrades, and many more considerations that increase the total cost of owning the item,” advised I69 Trailer Center. One must be aware of the time, effort and money invested in the trailer. For that reason, purchasing a trailer isn’t for every trucker.
However, there are many rental companies that allow owners to avoid the long-term costs; the trade-off is that it could cost more to rent a trailer for a short time. This is why renting may be a better option for business owners who only need trailers occasionally. According to I69 Trailer Center, for new business owners who are seeking to “bridge the gap” with their customers, renting would be a great short-term plan just to get started.
PACCAR’s director of sales, Chuck Davis, suggests full-service leasing as an option for private fleets looking to put their capital to the best use. According to Davis, fleets looking to avoid maintenance costs and those trying to navigate the driver retention issues or taking advantage of the latest technologies should consider leasing a full-service truck. In addition, one can avoid investing in their truck “down to zero value,” Davis said, and return the truck to PACCAR after using it.
Over time, however, as a business grows, renting or leasing often leads to buying as an investment towards the company’s growth. As a small business builds larger client revenue, it may begin to consider buying.
“Whereas a rented trailer is considered a one-time business expense, a purchased trailer is a business asset,” according to trailersuperstore.com.
Like all business decisions, there are advantages and disadvantages for all of the options. Purchasing a trailer means weighing your options in regard to cost, revenue and need. “The wise choice weighs the overall ownership cost against the rental option and then decides what the best investment is,” summarized trailersuperstore.com.