No matter which way you slice it, buying a truck is an expensive investment in an ever-depreciating asset. However, if you’re in an industry that requires you to move goods, access to the right sized truck at the right time is vital.
Before you consider buying a truck — which may lose its value before you reach peak usage — you may consider leasing or renting one. Maybe your business only hauls big items a few times a week or on special occasions, or maybe you’re bidding for more work and trying to get larger businesses. In these cases, renting or leasing trucks might be the best option.
But what is the difference between leasing and renting trucks? And which is better for your business? Let’s take a look.
COMMERCIAL TRUCK RENTAL
WHAT IS A COMMERCIAL TRUCK RENTAL?
A commercial truck rental is the use of a truck for a short-term period. A commercial truck rental might be ideal for a business that lands new contract work that exceeds their fleet resources or availability.
Commercial truck rentals are often priced for daily use, so fleets don’t usually get discounts or typical commercial rates if their needs exceed more than a few days. Vehicle rental can also be referred to as a short-term lease (we’ll define leasing further below).
PROS OF COMMERCIAL TRUCK RENTAL
✓ Reduced risk - When you rent a vehicle, you are not financially responsible for any mechanical failures.
✓ No depreciation - Similarly, you can drive your rental thousands of miles, and not absorb the cost of depreciation.
✓ Trade anytime - No commitment necessary. You can return your vehicle as soon as you complete your job.
✓ Usually available on-hand - At many rental vehicle companies, vehicles are plentiful and you do not have to make a reservation.
✓ No up front investment - Since you don’t need to put a down payment on a rental vehicle, you'll have more money saved to invest in tech or talent.
✓ Potential to modify contract - At a great rental company, you may be able to change from a short-term rental to a longer-term one. This is ideal if you unexpectedly score new business or realize your job is taking a week or two longer than expected.
CONS OF COMMERCIAL TRUCK RENTAL
𝙓 No ability to change specs - Unlike leasing, which gives you more flexibility, you usually cannot upfit or change the specs on your rental truck.
𝙓 Prices fluctuate - When the demand for rental vehicles is high — as demonstrated in early to mid 2021 because of supply chain issues — you may see prices skyrocket.
𝙓 No personal branding - Typically, a rental vehicle is going to be branded with the rental company’s logo. That means you don’t have an opportunity to use your vehicle as a moving billboard to promote your company.
𝙓 More expensive over long term - If you plan on renting, consider it a short-term solution. While a flexible rental company might offer a six-month rental plan to fit your business needs, it’s in your best interest to check before signing on the dotted line.
COMMERCIAL TRUCK LEASING
WHAT IS COMMERCIAL TRUCK LEASING?
Commercial truck leasing allows you to make a monthly payment to use a vehicle, but for a longer term than a rental, typically three to five+ years. Leasing a truck can be thought of as a long-term truck rental.
There are two types of leases to look at when considering commercial truck leasing: closed-end and open-end fleet leases. A closed-end lease protects your business from residual risk, as you return the vehicles at the end of the lease with no obligation to resell it. The leasing company assumes the risk of depreciation and remarketing.
An open-end lease offers two options at the end of the term: purchase the vehicle for residual value, or turn it in for resale. If the market value exceeds the residual value, you receive the gain. If the market value is less, you pay the difference. This is a good option for fleet owners that have their vehicles specially upfitted for tasks or are subjected to rough usage.
PROS OF COMMERCIAL TRUCK LEASING
✓ Upfitting allowed - Most companies that lease vehicles will allow you to upfit the vehicle with equipment that helps you get the job done.
✓ Personal branding permitted - Along the same lines, it would be atypical for a leasing company to brand their leased vehicles with their own company. Instead, you can add decals to help advertise your business.
✓ Investments equal value - With a lease, you reap the benefits of any changes in the market or modifications you make in the leftover equity.
✓ Flexible terms - Leasing requires a down payment, but there is flexibility to make that down payment high or low, which, in turn, would decrease or raise your monthly payment.
CONS OF COMMERCIAL TRUCK LEASING
𝙓 Early termination fees - If you do decide that a leased truck isn’t right for your business after signing, you will have to pay a termination fee to get out of your contractual agreement.
𝙓 Credit requirements - It’s typical for a leasing company to ensure you meet minimum credit requirements, which can make things difficult for business owners who don’t have good credit.
𝙓 Not good for short-term projects - If you need a truck for 15 weeks or less, it won’t make sense to sign onto a lease. While some companies do offer lease agreements for as little as five or six months, it would probably make more sense to rent for any amount of time less than that.
DIFFERENCE BETWEEN LEASING AND RENTING: THE NEED-TO-KNOWS
Commercial truck rental is a great short-term solution for one-off projects, but commercial truck leasing is ideal for a growing business. Ideally, you should opt to work with a flexible company that offers both leases and rentals — that way, the associates can align your unique fleet needs to customize a cost-efficient solution for you.