Owning a company vehicle that can be put to use in a variety of ways is a boon to any business owner. But are you hesitating to invest in a lorry for your company despite having considered it for a while? Many small business owners prefer to hire or lease their commercial lorries and trucks instead of buying them.
Here are five of the most important reasons why your business should consider leasing a lorry rather than buying a new one…
#1. More Affordable and Better Profits for Your Business
Leasing a commercial truck or lorry is attractive since it reduces the need for a large initial investment. When compared to outright vehicle purchase, leasing has no “hidden costs” like taxes, depreciation, overhead, etc. Truck owners have to make significant initial investments plus pay finance fees, deposits and the like. Leasing a commercial vehicle might increase your company’s earnings due to the lower monthly expenses. This means more cash for the business’ bottom line. Additionally, with fewer paperwork to complete, you’ll have more time to focus on growing your company.
#2. No Depreciation Costs
The depreciation in value of your leased lorry won’t have any bearing on your lease payments. Depreciation costs, which are an issue when purchasing a new lorry, are totally avoided. The cost of leasing does not reflect on a company’s balance sheet and does not affect the company’s net worth.
#3. Less Maintenance and Repair Costs
Hiring also helps you save money on repairs and upkeep. Oil changes, new tyres, and regular inspections are just some of the regular maintenance that come included with a full-service lease. However, upkeep and repairs fall squarely on the shoulders of the owner when you buy a lorry.
#4. More Financial Flexibility
Leasing is more adaptable than buying a lorry because many leasing firms don’t require a down payment. When your lease expires, you must give back the vehicle. You can have more options with this as well. In addition, a lease usually requires a regular and predictable payment, which might free up cash and provide you more leeway in your budget. This comes in handy when it’s time to make investments in the company or pay for unexpected maintenance.
#5. 24/7 Emergency Roadside Breakdown Assistance
Leasing offers many benefits, including the security of knowing you would be rescued in the event of a breakdown. With a full-service lease, you won’t have to worry about mechanical issues like you would if you owned the lorry. An expert vehicle repair technician is available whenever you need him, so you may call and get your lorry fixed right away. These professionals are well-equipped to deal with situations such as flat tyres and needing to be towed.
Hiring vs. Buying – The Factors and Variables
There are several factors to think about when deciding whether to buy or rent a lorry. If you’re trying to decide between buying and renting for your business, consider the following questions.
Does Your Use of the New Lorry Warrant a Purchase?
Asking yourself if your company will use the industrial vehicle frequently enough to justify the investment is the first step. Buying the vehicle outright may be preferable to renting if the car will be used frequently in the course of your company’s operations. If your company will only use the vehicle sometimes, renting could be a better option.
Would Owning The Vehicle Hinder Your Organisation?
The next consideration is whether or not you intend to keep the asset in your possession. When pondering this query, you should keep in mind two things. The first of these concerns brand identity. Having access to an HGV rig and the ability to brand it with your company’s logo is a great way to advertise your offerings, even in a subtle way. The price tag is a secondary factor to think about. Regardless of the season or the state of the economy, it’s almost always a good idea to invest in marketing, as doing so almost always results in a positive return on investment in the form of new consumers. It may take some time, though, before this advertising pays off in the form of increased sales.
How Much Can You Afford To Spend Right Now?
As was stated earlier, another consideration is whether or not your company can afford to make a one-time purchase. The down payment on a heavy-duty vehicle (HGV) can range from £2,000 to £7,000. That’s not even factoring in regular payments. On the other hand, renting a vehicle typically has substantially lower upfront fees and shorter payment terms.
Owning vs Hiring an Industrial Vehicle – Advantages
Purchasing:
- You can apply your branding to the vehicle and use it as part of your marketing strategy
- You can modify it to your specifications
- Owning an industrial vehicle increases the value of your company
Hiring:
- Long-term maintenance and insurance premiums are not your responsibility.
- There are no upkeep fees
- Only the actual time spent is charged
Owning vs Hiring an Industrial Vehicle – Disadvantages
Purchasing:
- The initial investment on a heavy-duty truck or lorry can be substantial.
- Costs to keep the vehicle running, especially as its lifespan of use winds down, can add up over time.
Hiring:
- Hiring a vehicle means that you cannot apply your branding, meaning that you do not obtain any marketing benefit
- You cannot modify your hire vehicle in any way
- Hiring does not add to the assets of your organisation
When it comes to financing a lorry whether that is a single vehicle or a fleet for your business, you have a few options: lease or hire buy. However, what works well for one company may have the opposite effect on another. It is dependent upon the specifics of your present circumstance, your business requirements, and your future objectives.
Think about the purpose of the vehicle, how long you’ll need it, how much it will depreciate, and whether or not you’ll need any special modifications. Before making any final decisions, you should discuss the potential financial effects with your accountant.
