Utility Trucks - Rent Or Buy?
There may come the time when you have to question whether or not it is worthwhile to own, rent or lease a utility truck. There are of course pros and cons for each instance, but the thought here is to try to determine what works best for you. One of the first things many business owners do is run out and buy a new utility truck for their business, only to discover that further down the road, the move was a bad one. Others will be stuck with an old, outdated vehicle that does not meet their needs. So when do you discover what will work best for you? The answer lies in what your actual usage and hauling needs really are. If you make one delivery a month, it hardly makes sense to buy a new vehicle that will set your business back thousands of dollars. The ultimate question for you should be what will be the cheapest way for me to go. This article will focus on the pros and cons of owning, leasing or renting a utility vehicle.
Making The Call
Decide if your vehicle will be used 52 weeks of the year. It makes a great deal of difference whether it is used weekly or if it is a one off routine. If your business is a new start and you need a vehicle for transporting large pieces of equipment or display cases for example, and there is really no further need for a truck after that, then of course you would consider renting. If you need a vehicle for delivery when your business is up and running, that is an altogether different story.
Rent Versus Buy
When you buy, you are not only tying your assets up, but are also paying finance charges on the vehicle. The questions you need to ask yourself are "how much will the payments be?" and "how does this affect my cash flow?" Although you can depreciate the vehicle for a set period of time as far as taxes are concerned, the bottom line here is that you have capital tied up for things that might go for better uses. If you are not getting the most bang for your buck, consider leasing.
When you lease a vehicle, you pay for less than 100% of its worth. You have the opportunity at the end of the lease to either buy the truck or return it and get a newer model. This resolves maintenance problems that occur when a vehicle gets older. Leasing a vehicle has the advantage of allowing you to pick and choose a vehicle that you otherwise wouldn't consider buying.
So what about renting? Renting has the distinct advantage of allowing you to have a vehicle for specific needs. A general contractor may need, for example, a vehicle that could be used for offloading heavy materials in high places, such as a rooftop. Renting the vehicle makes the most sense here unless you are a roofing contractor. The down side to renting? It is the more costly of the two between renting and leasing.
Achieving the Right Balance
There are as many different opinions about renting, leasing and buying as there are vehicles. You have to strike a balance somewhere so that it makes the most economic sense for your business. If you know you will use the vehicle for 52 weeks of the year, then buying or leasing makes the most sense. If you have special projects, then renting makes the most sense. What is needed is a hard look at how it affects your bottom line. If a project has a budget, and you are responsible to see that it comes in at or under budget, then making this choice can be a bit hard.
Another important aspect of this is knowing what your liability is. If you are renting a truck, then the liability issues belong to you. You are responsible if an injury occurs to an employee, and it will not be covered in any way by the rental agency. It is always the best bet to call your insurance agency and find out what your coverage is on situations like this.
Whatever your decision is, when you consider renting, leasing or buying out-right, always be aware of the bottom line. If you know you are going to get your money's worth out of a utility vehicle, then by all means buy one. If unsure, it is probably best to lease. Whatever you decide, do your own due diligence before you rush right out to make a purchase or sign a lease. Your pocketbook will thank you in the long run.