What are my benefits to Leasing a Commercial Truck?

Making the best choice for your business is your top priority, and sometimes it can be difficult to know which choice really is best. When it comes to leasing a commercial truck for your business rather than buying one, there are pros and cons to consider. In most cases, the benefits are significant enough for many businesses to choose this option again and again for their commercial vehicle needs.

One of the most obvious benefits of leasing a commercial truck is that your company will have much less upfront investment, which will allow your business to keep more cash on hand and preserve your line of credit to use for operation expenses and other investments instead of costly maintenance of a commercial vehicle fleet. Every lender will have different requirements to qualify for a lease, though most should offer both Open-End and Close-End leases to suit your company needs. Open-end leases have the benefit of no mileage limitations, no penalties for early termination after the initial year lease, and no penalties for excess wear and tear. This is where the savings really benefit the company as compared to buying a commercial truck and incurring costly and inevitable maintenance expenses. Closed-end leases have more restrictions relating to maximum mileage usage, increased liability, responsibility for tax fees, and less coverage beyond normal wear and tear, for example. However, this option can be a benefit for companies who have specific and planned usage parameters for those vehicles, in addition to the fact that like open-ended lease agreements, businesses can take advantage of having zero obligations at the end of the lease agreement while also avoiding the value lost due to depreciation.

Other benefits to leasing a commercial truck are the option with some fleet leasing companies to participate in a fuel management program that helps track fuel spending with odometer readings, potential discounts, and preventative maintenance. There are also tax write offs available such as the Standard Mileage Rate or Actual Car Expenses, in addition to interest and depreciation write offs. These vary based on vehicle use, expenses, loan versus lease financing, and the number of vehicles used for business for example. When leasing a commercial truck, two lease types are available, an operating lease and a capital lease. You will want to work with your accountant to determine which one is the most beneficial to your business.

With an operating lease, the business owner is only paying for the right to use the vehicle, and therefore has no ownership, which means that the vehicle is considered an operating expense, and is not factored in to the balance sheet. This may save your business money in one area, however you will not be able to claim depreciation or interest as you would be able to with a capital lease, where you have part ownership of the commercial truck. Although there are a seemingly overwhelming amount of options for leasing a commercial vehicle, there is sure to be a solution that benefits your business.

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