Of all of the many expenses trucking companies must take on in order to run a successful business, buying vehicles is one of the costliest. Because of this, many freight carriers opt to lease their trucks. Yet, there are pros and cons to buying and leasing. How should you decide whether to buy or lease?
Buying a Truck
Pro: There are less fees and expenses associated with buying.
Pro: Buying allows you to establish and grow your business’s equity. As you make more and more payments, your equity will continue to grow.
Pro: Once you pay off the truck, you’re free to do whatever you want with it, including selling it for a profit and buying a newer or better model.
Con: Taking out a loan and keeping up with payments can put strain on your business.
Con: If you take out a loan with bad interest rates, you may end up paying a lot more than you anticipated in the long run.
Leasing a Truck
Pro: Leasing offers greater flexibility.
Pro: There are multiple kinds of lease agreements. You can choose the one that best suits your business’s needs.
Con: You will not own the truck at the end of your lease agreement.
Con: Leases usually mean multiple expenses like security deposits, acquisition fees, and more.
Con: Leasing can negatively impact your company’s cash flow, taxes, and ability to scale.
It’s up to you and your company whether buying or leasing a vehicle is the right move. Ultimately, it comes down to the issue of cash flow. Cash flow is an essential consideration with either option, as both are going to cost you.
If you need a new vehicle to grow your business but can’t afford to buy or lease, consider freight invoice factoring. A good freight factoring company like Apex Factoring or OTR Capital Factoring will help keep your company’s cash flow steady when invoices take a long time to get paid. The money they provide you can be used for anything, including buying or leasing a vehicle.
Let us help you find the best factoring company for your freight business!
If you are interested in pursuing freight invoice factoring but unsure how to find the best trucking factoring company for you, look no further than Top 5 Factoring! Head over to our ratings to see the best freight factoring companies for trucking businesses you should consider signing a contract with. If you have further questions about freight factoring rates or the best freight factoring company for you, contact us today, and we’ll assist you!