Should you buy or lease your truck?


SPONSORED CONTENT: If you are planning to get a new truck, you might wonder if buying or leasing could be the best option.

Should you buy or lease your truck?
Should you buy or lease your truck?

 

Each of these options has their own benefits, which you need to compare against your own circumstances before you select to buy or lease your truck.

Furthermore, you need to be aware that the lifespan of a truck in Australia is normally around 13.92 years, according to The Truck Industry Council. During that time, you will need to think about all the maintenance, insurance and the extra fuel consumption compared to a newer model.

Still, as Savvy CEO Bill Tsouvalas mentioned, "your choice of leasing or buying will depend on how long you are planning to keep the truck, what financing options works for you and what the tax implications are."

The benefits of buying

With truck finance, even though the truck’s value decreases over time, it remains your asset. So, you can sell it when you want, and you can make modifications to it such as branding the truck.  

Also, unlike buying a truck outright, you can retain your cash flow with a truck loan, as you gradually pay it off.  

Plus, with a truck loan your insurance rate is less in comparison to leasing, and you will not be held liable for scratches and dents. Also, in the long-term you will be spending less buying than leasing a truck.

There are also tax benefits with truck finance. These benefits depend on the loan type option, be it a chattel mortgage or a hire purchase. Both these payment options allow tax benefits on the goods and services tax and fuel input tax credit. Plus, with the hire purchase option, you can claim insurance and maintenance costs.

The benefits of leasing

Unlike truck finance, with leasing you only have the use of the truck for which you pay a monthly fee, until the contract expires. During that time, the truck is not your asset, and at the end of the contract, you can trade it in for an upgrade or walk away. Therefore, with leasing you can have the benefits of no commitment and flexibility, which can be useful regardless of your business size, small business included.

Also by leasing a truck, you can control your costs. Example, seasonal operators that need a truck during winter months or harvesting time only, can lease it for short periods and not spent money on storage and insurance for the rest of the year. Plus, as there is no risk of obsolete equipment you do not have to budget for upgrading the truck in a few years. But, leasing works for short periods only, and if you want to lease for longer periods, then financing would work out cheaper.

Still, with leasing you can claim tax deductions for the use of the truck. Speak to a tax advisor about how you can get the most out of these benefits.

Comparing the benefits of buying vs leasing a truck

To work out which option will give you the best benefits, you need to work out which will address your budget best and allows you the flexibility you want. Otherwise, speak to a financial advisor about your needs, to determine if you should buy or lease a truck. 

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