Lease term vs Loan term: Semi Truck
Lease Purchases are typically shorter duration (30 month- 42 months usual maximum) than
standard Class-8 tractor financing (which can run up to 60 months) therefore the payments on
a semi truck lease will tend to be somewhat higher.
Think for a minute, what is the value (or equity) of a tractor you purchased used, ran hard
for 48+ months and then traded? In some cases a lease might be better.
Enjoy the generous tax benefits of being an independent contractor
with (little or) no money down lease tractor purchase and no necessary credit history
established (in most cases).
If you're leasing a truck and experiencing trouble
with it, your Carrier that you are leasing from will work with you toward a solution. In contrast,
if you're buying the truck, it's all your responsibility.
If you're leasing a truck rather than buying
it and you have an accident, your Carrier can usually work with you to finance missed payments
while supplying another truck to lease until yours is repaired.
The base cost of leasing has not changed
during the last three years. The cost for buying a new truck goes up about 4% every
If you're leasing a truck and have warranty
problems, simply let your Carrier know and they'll handle the problems for you. In contrast, if
you're buying a truck and have warranty problems, you are on your own.
If you're leasing a truck and you get hurt
and are unable to work, you can contact your Carrier immediately and arrange for them to
terminate your lease and take possession of the truck. This protects you from making any more
payments without negatively affecting your credit. If you're buying a truck and become injured,
your payments will still continue to be due each month even if you are unable to work.
Some negative considerations: Some Leases require
excess-mileage charges, maintenance, performance, and tire escrow accounts and other possible
expenses that can be quite expensive as weekly deductions. All the unused portions of all
your escrows should come back to you at the end of your lease term if you satisfactorily complete
the lease without incidents, accidents, and major claims. This can add up to around $10,000
in 36 months as what is commonly called a "lease completion bonus." So, if you perform well
during the lease, this can take the sting out of the deductions which come back to you and end up
being kind of a "forced savings account" that you might not otherwise have had. (Not all Carriers
offer this lease-completion bonus)
The Carriers have to deduct these monies (for maintenance, tire replacement, etc) from the
drivers weekly Settlements because, guess why, most drivers are not going to set these accounts up
and put the money back for their own operating expenses.
Most leases that we have seen require that you run about 3,000+ miles per week to really make them
work. Too much time off between trips can put you in the hole because the truck has a weekly,
actually daily, fixed-cost that requires consistent revenue to balance these fixed expenses.
Once you calculate these costs you can plan your trips and home time
to your own financial advantage and not go into the "red."
The bottom-line is you don't
have to buy a truck to be your own boss. There are many good truck leasing programs out there to
help you establish or rebuild your credit history and to allow you to operate a tractor and become
an owner operator that you might not otherwise be able to afford or qualify for right