Truck hire vs buying trucks
There are pros and cons to everything but what about when it comes to trucks and whether you should hire or buy them. Which option will save me the most time and effort? Which will help meet my business needs best? Truck Hire may work better for your business, let’s take a look at all the factors you should think about.
Let me offer you a little bit of insight into the pros and cons of buying and hiring.
In times gone by outright purchasing of an asset has usually been most peoples and sometimes only choice but times are rapidly changing. Equipment hire is becoming more and more popular. In 2020 it was reported that half of trucks and vans in the UK are hired which undoubtedly reflects the complications of owning, repairing and maintaining your own truck.
What considerations should I think about when choosing either truck hire or buying a truck?
- Do you have enough money available to buy a truck?
- If you were to buy a truck outright, would other investments be affected by tying up that capital?
- If you were to buy a truck outright, would you have the financial means of running and maintaining it?
- How long do you want the truck for?
- How many miles will the truck be driven per week/month/year?
- Would you like the option of changing your truck?
What are the pros and cons to owning a truck?
Some of the pros are:
- Ownership – this can be seen as freedom. Freedom to do as many miles as you like, change things up with extra parts and own a valuable asset.
- Resale – You get the advantage of the resale value when you are ready to sell your truck even if it is a fraction of the value you paid to begin with.
- One time payment – It is great to be able to pay for your truck in one go – congratulations!
Some of the cons are:
- Initial down payment is huge – there is alot of capital required for this asset but thankfully 100% of the VAT can be reclaimed and depreciation can be offset against taxable profits.
- Maintenance issues – this is a massive factor to consider as to outsource it can be very expensive.
- High monthly finance payments – finance payments tend to be higher than lease payments because you’re paying off the entire purchase price of the vehicle, not just the vehicle’s depreciation during a lease term.
- Depreciation – Your truck can depreciate by as much as 30% within just one year depending on the make and model.
What are the pros and cons of truck hire?
Some of the pros are:
- Predictable – With a lease, the costs are steady and you’ll know what you’d be paying every month. Usually all items included in leasing a truck such as road tax, MOT tests, VAT and maintenance expenses are spread evenly across monthly payments.
- Business growth – Helps with the growth of your business as you are not tying up your capital.
- Adaptive – At the end of the lease, you can choose to take out another newer truck or hand it back to the lender.
- Maintenance and repair package – Most leases come with packages and breakdown support to help with the extensive upkeep and parts for trucks.
- Various truck hire options – This means that you can choose one that suits your needs as a business providing convenience and flexibility.
- More affordable – It does not involve hidden costs such as taxes, overhead and other expenses. You can then obtain better profits for your business since your monthly payments are lower.
- No depreciation costs – This will not affect you. Leasing also doesn’t reduce the net worth of your company so it really doesn’t cause any negative impact on the books.
Some of the pros are:
- You don’t own the vehicle – you have no asset available for a ‘rainy day’.
- Damage fees – If you go over the agreed mileage or damage the truck, there will be fees to pay.
- Less control – On the downside, the lender will have a lot more control on mileage, branding and how you use the truck.
The bottom line is that as prices on new vehicles continue to rise, truck hire becomes a more convenient option. It allows you alot more flexibility as you don’t need to be concerned about maintenance and repairs. You spend less money on hiring so your business can be more profitable and you’ll have more time to focus on it. Technology is always advancing so you can update to a new modern once your lease ends and you are considering the next contract.
At AT&T Rentals we have an extensive range of trailers for hire. Our trailers are modern, serviced and are able to meet the most demanding requirements. No matter what you need to transport we have the right trailer for you. You can read more about our trailers and trailer specifications here.