We are a small Junk Removal company operating with a single truck. Our current dilemma is whether we should purchase a used truck now and put the extra money into repairs, or to wait a bit longer until we can afford a new truck that won't need repairs right off the lot. There's pros and cons to both options and we just can't decide.
Are you buying or financing?
Are you losing money by not having another truck / Are you at full capacity?
Can you increase capacity without the new truck right now? Perhaps by running it 7 days a week?
Is there any seasonality for your business and what is it?
What is the cost variation between what you can afford now and what you ideally want?
How much do you hate repairs, downtime, etc. How much does it impact you and the business?
Answer these, then I can help.
We would be looking to put a cash down payment down and then make payments for the remainder of the amount.
During our busy and regular seasons , we lose money by not having a second truck (Spring and Summer). During the fall and winter, we can fit our workload onto a single route.
We only run the truck 6 days a week and could increase capacity by working on Sundays.
We could buy a used truck cash now for 20-30k or we could wait for a truck worth 40-60k.
Repairs are extremely costly for us and impact us regularly. Our first truck was bought used, and spends several days a month in the shop. We have to rent a truck during these downtimes, which eats up our margins
Sounds good. Yes, downtime is extremely costly - still have to pay employees, potential for upset customers, headaches galore! Lots of lost money and lots of lost mental capacity.
It sounds like you have some room to increase capacity and with the fall/winter coming up, you don't need the extra truck - so best to wait and/or be extremely picky with your next deal on a truck. Maybe you'll find a good deal in the offseason but you have time to be picky.
A good way to look at it, is a vehicle/equipment that doesn't have downtime.. is a fairly fixed expense. And we all love that predictability. Something always needing attention has a variable expense. Not only that but it's extremely stressful.
Sounds like saving up might be the best but again, just an opinion. We still buy used stuff once in a while but have moved to purchasing new with maintenance plans. We had to raise prices slightly to cover it but it was less than we expected. The lack of worry, downtime, etc... is well worth it to us and the price increase didn't impact the closing rate. If you go this route, don't forget to factor in insurance cost. Especially with financing, you'll sometimes be required to carry higher insurance coverage. You just want to make sure your profits are healthy and stay healthy. Too many people eat into profits to buy new stuff and that's just a bad idea.
At least you have a truck :) I am renting out a van 3-4 times a month to do deliveries of stairs or long railings.
I have the exact same dilemma. I know for a fact that newer vehicles will have less headache at first and less down time, but at the same time, me personally, I don't have the capital yet to get one and don't want to and on the other hand - really want to get at least something!
Stress with my van rental company is getting to me from time to time. One day they have the van, the other they don't. You have to call them and make sure they will have it and so on. Also i need to get the tools from my shop in to the van and back to the shop when i am done... which is also - time and time is money.
I understand your pain. When we used rentals, there was almost always some drama associated with our reservation. You may want to consider looking into purchasing a used U-Haul box truck. They are extremely inexpensive compared to some alternatives and have complete vehicle maintenance history etc. In my area, 15 foot box trucks from U-Haul run anywhere from 7k-12k depending on how beat up the truck is.
I just went through this again this year. We have done this in the past. I feel if you have the cash to investing a used truck and put money into repairs. It sometimes can be faster and quicker than paying for years. But also you have to look at if you finance a new truck or buy outright, there is no problems you hope for years with it. I will always choose a used truck over new truck. Just because for me if its a work truck, then Im not worried when it gets dented or dinged up.
My thing is that I know how people treat their work vehicles. They get tortured daily for years and then whoever buys the vehicle has to inherit the consequences of that. The main pro to buying new for me is being able to baby the truck right off the lot with the goal of prolonging the lifespan of the truck. There definitely is a huge benefit to being able to pay cash for a used truck and get working with it immediately though, and just deal with the repairs down the line.
Totally agree it's hard to buy a used truck, especially if it was owned by another company. But usually you get a couple of years out of them. I try to look for a used truck on the side of the road. That is a one owner truck. Better way.
Do the numbers!! They never lie.
On balance I would recommend a used truck. If you know any mechanics, I would send them stuff you find on Facebook Marketplace and ask them for input. Then bring them to check out the truck. Of course, compensate them for their time.
Do you have a local bank you work with? If cash is a concern, I would find a local bank who give you a secured line of credit and use that to finance the truck. You would still want to pay for the truck in cash but then you could pull on that line of credit.
New trucks will have less maintenance but are in some ways more complex and costly to work on when there are problems compared to older trucks.
