Forum Discussion
Should I lease or buy a work vehicle?
We at GB Plumbing decided to lease our first work vehicle as we thought we wouldn’t be growing or doing much besides having 1 truck. But once things got busier, and we had to start hiring more, we had to buy a truck pretty quickly to keep up with the demand of work, and same for our third vehicle.
9 Replies
Many factors must be considered, but as a general rule of thumb, buying is the best route for business use. I cannot think of an instance where leasing would make sense for a business.
Side note; buying a vehicle that is 2-3 years old will result in huge savings as the depreciation rate is highest on a new vehicle however, some folks value a warranty on a brand new vehicle more so they buy brand new.
Hope this helps!
Very True. We buy new and then replace at 100K. Cost of repairs hurt but missing jobs and dealing with down vehicles costs much more. Buying new has served us well. Although we have been lucky and haven't had and major issues with new vehicles. That is not always the case.
We also buy new and drop them at 100k miles. Warranties have saved us, we had an entire drivetrain replaced under warranty, about 17k in work. Also, new vehicles are a great tax write off.
Lease? No. Loan? Yes.
Our first truck was a 2017 Dodge 1500 pickup truck. Four months later we bought a brand new 2023 Promaster 3500. Four months later a Promaster 2500, then another Ram truck, and another Ram truck. We have 5 total vehicles, with six employees and we're almost at our two-year mark. We have about $5K a month in auto loans.
Many people will tell you not to take out loans but instead pay with cash. I think that's fine as long as your brand message is affordable. First impressions are generally forever. How people see you when you pull into their driveway or behind you in traffic, creates a mental image of your company within your community whether you realize it or not.
Your vehicles are rolling billboards that are constantly broadcasting your brand. In my opinion, an auto loan is just an investment. If $1,300 a month provides me with free marketing AND can generate $50K a month, then that's a great ROI.
I like your point of view on this. Im wondering if I should buy my first truck/van. I work out of an enclosed trailer right now. It has its advantages and drawbacks. Im struggling to decide if its worth the monthly cost and if I can afford the monthly cost. And how the business can buy it not me.
I don't think you'll have much luck with the business buying it. The company can pay for it, but until you have two years, nobody is willing to finance your company. I financed all our vehicles early on, then transferred the titles to the company as soon as I could.
Buy used!!!!!! Leasing a work vehicle is like signing a deal with the devil. Buy used...
Did I say that already?I would tend to agree with you about leasing being like dealing with the devil...but for a new business that may need to borrow for other reasons, leasing gives an option to keep the liability of a vehicle loan off the books and may make the difference when applying for other financing.
We just bought a new RAM Promaster 1500. RAM has some great discounts this month. We sort of paid cash. I paid for it with our Line of Credit, which is charged at Prime rate. Auto loans were about 4 points above prime. I just have to be vigilant to make payments to principal regularly, or I'll end up with a $40K loan and a 5 year old falling apart van.
