Deciding whether you should rent, lease or buy a semi-trailer is a decision that should not be taken lightly. Each has its benefits, and each has its advantages over the other options.
If you’re like the majority of fleet owners across the nation, it’s usually not a matter of either/or, but some combination of both. About 60 percent of carriers own their semi-trailers, while around 40 percent lease a large portion of their fleet assets, according to the National Private Truck Council.
There are multiple points to consider when weighing the decision between renting, leasing and owning, including:
- Your length of need
- The state of your existing equipment and facilities
- Your cash flow and credit worthiness
- Your ability to manage equipment maintenance
WHEN TO RENT
Generally speaking, renting is ideal when your transportation needs are short term, ideally a month or two. Any longer, and you should look at a lease.
However, renting can be an ideal solution if your business is seasonal, or if a large job or a new client comes in that requires additional fleet assets but may not justify either a long-term lease or a purchase. Renting is also the perfect option if a leased or owned asset goes out of commission due to an accident or the need for maintenance.
WHEN TO LEASE
Leasing is becoming an increasingly popular option due to changing industry technologies and a shortage of technicians to work on today’s semi-trailers. Leasing offers financial benefits and can be less expensive than ownership in the short term because you are only paying for the use of the semi-trailer. Leasing also requires fewer upfront costs and the credit restraints of a purchase. It’s an ideal solution when cash flow is tight or the margins being made on a project are slim.
You can also carry the semi-trailer on your books as a monthly expense rather than as an asset. Leasing is also a viable option if your company is growing fast and you need capital to invest in other areas.
WHEN TO BUY
Owning, of course, has distinct advantages in terms of tax considerations, such as depreciating the semi-trailer as an asset. But there are ownership costs as well.
When you purchase a semi-trailer, especially if it is done on credit, you build up equity in your purchase over the term of the loan. That means you have the ability to trade the vehicle in on newer equipment if you want or need to upgrade. However, leasing may actually afford you the option of upgrading a little quicker than a purchase.
When you purchase, you also have to factor in the cost of ownership, including regularly scheduled maintenance and management of the trailer, which involves the cost of personnel to look after the asset or the upkeep of the facilities where it is stored.
MAKING THE CALL
Renting, leasing and ownership each has insurance costs that vary depending on the terms of the rental agreement, lease or the value of the purchased asset.
So where do you start?
A full-service company, such as Transport Services, offers all three options. A company with those capabilities can help you make the decision that suits your needs best, including the lease or purchase of used semi-trailers as a way to meet your fleet needs when cash is tight.
A full-service approach can also go a long way toward making your life easier, sometimes with just one call. This can include help with customizing equipment or federal inspections, as well as 24/7 over-the-road service support when breakdowns occur. Transport Services, for example, offers 24/7 roadside support anywhere in the United States through its Mobile Service Division.
With a full-service company, you also develop a rapport with a company that is able to meet your business needs for life, offering solutions when over-the-road technology or your business needs change.
If your needs change quickly, you also want a company that uses technology, adapts well and has inventory on hand to meet your needs.
So first assess your needs, then weigh your options and shop for a company that has the resources and technology to be responsive.