Purchasing or leasing a new or used commercial truck like an 18-wheeler or a fleet of concrete trucks is a hugely daunting task for first-time prospective buyers.
It’s a complex strategy acquiring the right trucks for the right jobs, and making it a financially stable decision adds to the need for knowledge and understanding of the types of work you’ll be undertaking, and the financing options available to you or your organization.
Considerations on specific use cases and whether these contribute to your decisions based on job specifications and vehicle capability, as well as mileage, fuel efficiency, hauling power, engine history and maintenance, insurance, and resale values make purchasing the right truck a crucial part of expanding or starting your business.
Income & Expenses
Purchasing your new fleet or tractor trailer unit should first be dependent on your initial speculation about your income and your expenses. Large fleets of work-centric vehicles are expensive to operate, and as such, require a considerable amount of income to offset their use and produce revenue for your company. When thinking about business equipment, you should always be focused on investing with return on investment (ROI) in mind.
Having your own authority means you are your own trucking entity and the signing lease owner operator. This means you’re responsible for securing your own permits, and paying your own taxes associated with the operation of your equipment.
Common Carriers provide for-hire trucking service and must file for both liability and cargo insurance. Contract Carriers provide similar services to specific shippers on a contractual basis and must only file for liability insurance.
There’s also the issue of general operating expenses. Applicable expenses that can be written off in full or in part to provide tax incentives to operators include tires, food, and drink for drivers on extended trips, additional employees that directly assist the driver, and don’t forget that large pieces of equipment often come with large fuel tanks requiring fuel.
What’s left over when you’ve paid all of your operating expenses is your net income.
The Right Truck(s)
Begin your search researching some applicable trucks and/or fleets available on the market that pertain to the types of work you’ll be doing. This may mean that you buy from a dealership – new or used – or a private seller.
Many organizations opt to deal with established dealers as they can provide standard information and background about the trucks you’re inquiring about.
- Know the engine’s history and take a good hard look at its recorded maintenance records for consistency. If you’re looking at an engine with over 700,000 km’s on the odometer, prepare yourself for an engine rebuild in the coming months, or years.
- Ask for copies of maintenance records. Ask how often the oil was changed and about the reputation of the mechanics doing the work to the equipment.
- Find out what hasn’t been replaced in some time, like a transmission for example, and gauge how many miles you’ll get out of your purchase before incurring this cost.
- Research the make and model and find out about any potential recalls or problems encountered with the engine and transmission combination it boasts. This goes for suspension, electrical systems and wiring harnesses as well.
- Are the tires in good shape with lots of treads left on them? Have oil samples from the engine, transmission, and rear end been analyzed?
Be sure that you’re looking at the correct truck that can handle the work you’ll throw at it. This means asking about horsepower, having the correct gear ratios for hauling a specific amount of weight, user-friendliness, driver comfort, longevity, etc.
There may be many different pros and cons to purchasing different trucks and/or fleets of equipment from different sellers, namely the inclusion of additional equipment that you’ll need.
If you’re running a fleet of concrete trucks, for example, having the required infrastructure like hoses, concrete tumblers, and hydraulic systems are crucial to being able to operate your new equipment. Leaving the deal without them means you’ll be making another purchase soon enough. Maybe you’re looking to invest in a plow service business and are purchasing new plow trucks; not having the right plow when you buy the truck is cause for concern.
Look for deals from like-minded dealers or operators looking to get out of a lease, or looking to move old inventory to make room for new models.
Leasing provides many positive perks for businesses looking to enlarge and update their fleets of transportation equipment, often requiring a lower – or eliminated – down payment, making access to the right equipment easier. This allows a business to operate better, newer, and potentially more fuel efficient line of trucks, you’ll also pay lower sales tax.
Leasing alleviates the pains of having to repair these vehicles as well. Many leasing agreements keep the borrower under the vehicle’s included factory warranty for most manufacturers defects and required repairs.
At the end of the leasing agreement, businesses can easily transition into a new fleet every two or three years. New vehicles mean new technology, reduced insurance, increased fuel efficiency, and elevated reliability. If you’re purchasing from someone looking to get out of their lease, you’ll benefit from lower payment options.
Leasing is a quick and painless way to flexibly upgrade or expand a business’s equipment needs. Predictable lease timelines translate into predictable timeframes to recoup costs and adjust your business practices accordingly.