The Benefits of Truck Leasing vs. Purchasing

Full-service truck leasing is a great option for some companies, but not always the best option. Companies need to consider their operation and tax position while determining their best option. Most full-service leases include guaranteed maintenance in the monthly payments so the primary benefits are usually service related but can be financial too.

Start with your tax position. Is your company in a position where you need or want tax depreciation credits? Full-service leasing is off-balance sheet, so the vehicles are not your asset. The leasing companies own the vehicles for tax purposes.

Next, consider your operation. Is on time delivery and vehicle up-time critical to your operation? The more time sensitive your deliveries are, the more leasing becomes a better option. Most leasing companies include preventive maintenance which is designed to reduce breakdowns over the life of the vehicle. If there is a breakdown, most leasing companies provide some sort of road assistance or possibly a substitute vehicle. This can be a crucial service during a breakdown and could help avoid losing an account or in the auto industry avoid fines from the OEMs.

However, if your deliveries are not time sensitive, perhaps predominantly to your own warehouses, this might be a service you do not need. Increasing vehicle up-time is a benefit most fleets would enjoy. How much of an improvement depends on what you are comparing it to. Do you have your own shop or are you just using dealer networks when you need repairs?

Cash-flow is another benefit of leasing. Most leasing companies combine the finance and maintenance costs into one monthly payment. This means each month you pay the same amount, regardless of any repairs needed. When you own vehicles you might have a couple month with no maintenance costs then a $6,000 repair. Even if the annual cost ends up the same, the consistent cash flow from leasing is a nice benefit.

Reducing risk is the last benefit we will cover. The typical full-service lease is a walk away lease. This eliminates any residual risk. At the end of the term, you turn in the vehicle. When you purchase vehicles the residual value is at the mercy of the used truck market.

There are many benefits to leasing vehicles. If you decide leasing is the right option for your fleet, the next step is to find the right partner.