Financing vs. Leasing a Truck: Weighing the Merits

Financing vs. Leasing a Truck: Weighing the Merits

by Johnny S

Should you finance or lease your business truck? Both of these methods have their merits and downsides. If you opt to finance, you will be committing your business to repaying the loan facility over a period of time. If you opt to lease, you will free up money that can be used in running the business. Even then, you will not have the full ownership of the truck. So, which way to go?

Overview of a lease and financing

A lease is much like renting a condo. You pay a specified amount to use the property for a specified duration. For a truck, you either renew the lease contract on expiry of the duration agreed or return the truck to the dealer.

Financing basically involves convincing a lender to fund a percentage of the cost of the truck while you shoulder the down payment. This means you gain the full ownership of the truck and can do whatever you please, with the exception of selling it before completing your payment.

To find the best options for truck and trailer financing and leasing in Canada, visit Smarter Loans – Canada’s Loan Directory.

Before committing to any of these approaches, you should weigh the suitability of each to your business model.

Pros of financing

  • Ownership rights

As you own the car, you won’t have to play by someone else’s rules. You won’t have to observe mileage restrictions, and you can customize the vehicle to fit the needs of your brand.

  • Better resale value

At some point, you will want to change the truck and get a newer model. Since you already have the full rights on the old truck, you can ensure it is well maintained so as to attract a nice resell value. The better this resell value is, the more cash you will have to fund your next vehicle.

  • Lower credit score

Unlike with leasing, you don’t need top-notch credit score to qualify for financing since the vehicle itself acts as collateral.

  • The vehicle in great condition

Often times, when purchasing a vehicle through financing, you will want to buy a new or technically sound vehicle. This can save you many hours since break downs will be fewer and far apart.

Truck financing in Canada doesn’t need to be complicated, if you are dealing with the right company.

Benefits of leasing

  • With modern technology, vehicles are becoming obsolete fast. By opting to go the leasing way; you will have the liberty to update your trucks often thus keeping up with the market trends.
  • Once you opt to lease the truck, you won’t have to shoulder the costs that come with depreciation of the vehicle.
  • By leasing, you will free up funds that can be used to market your business model or run other core facets of the business.
  • Leasing means you won’t have to pay hidden costs that come with financing. These hidden costs may be in form of insurance costs and processing fee.

Bottom line

If your business is operating on a limited budget, it may help to lease the truck so as to reduce periodical installments. Financing is ideal for businesses that are seeking to retain their brand appeal since you have the full rights to customize the truck to match your existing fleet. When you are ready to apply for a truck loan, don’t forget to visit Smarter Loans to compare options, and start the application online.

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