The Pros and Cons of Truck and Equipment Leasing for Tradies

To lease, or not to lease? That is the question pondered by many who are looking to start a small business using their trade qualification. What are the benefits and drawbacks when leasing the vehicles and equipment you need, as opposed to buying outright?

We’ve broken down both options to help you make an informed decision about leasing the trucks and equipment used in running your business. However, ultimately whether to lease will depend on your individual business needs, which is something you will need to consider.

Why Choose Truck and Equipment Leasing?

Tradies and small businesses may choose to lease a truck or equipment for their business for various practical and financial reasons, including:

Cost Management - Leasing allows tradies to acquire the necessary equipment or trucks without a significant upfront cost. Instead, tradies can spread the cost over regular lease payments, which often helps with managing cash flow.

Preservation of Capital - By leasing, tradies can preserve their working capital for other essential business needs, such as hiring skilled labour, marketing, or handling unexpected expenses. This may be of greater priority for small businesses with access to limited capital.

Access to Newer Equipment - Leasing can also provide the opportunity to regularly upgrade to newer and more advanced equipment. This is especially important in trades where technological advancements can enhance efficiency and productivity.

Flexibility - Leasing offers flexibility in terms of equipment choices and allows businesses to adapt to changing needs. As projects evolve, tradespeople can lease different types of equipment to meet specific job requirements without committing to long-term ownership.

Quick & Easy Acquisition - Leasing typically involves a quicker and more straightforward acquisition process compared to securing financing for a purchase. This speed can be advantageous when a tradesperson needs equipment promptly for a new project.

Pro’s of Leasing Trucks and Equipment

• Cash flow is more likely to remain constant. Because there is a lower capital expense upfront, and monthly payments are predictable and not tied up in a depreciating asset, you can typically manage your cash flow more easily.
• Lease payments can be claimed as a tax-deduction.
• You can stay up-to-date with the latest advancements in vehicles and equipment. If you need to update to stay competitive or change to improve efficiencies, you have the flexibility to do so.
• If a piece of equipment or vehicle breaks or has issues due to normal wear and tear, the leasing company is usually in charge of fixing the equipment, saving you maintenance and repair costs.

Con’s of Leasing Trucks and Equipment

• It’s likely that you will end up paying more over time than if you had bought the equipment upfront.
• You don’t own the equipment. So, you have no option to sell the equipment when you’re done with it.
• The length of the lease might be longer than you want. So, if the contract is strict, you might be stuck paying for a piece of equipment or an unused vehicle that you no longer need.
• When it comes time for you to make a decision about leasing or buying a vehicle or equipment for you small trade business it will be important to weigh the primary leasing benefit of improved cash flow against the cost of not having total ownership of the asset.
• If capital is limited as a small trade business, then leasing equipment can be a good option. However, an established trade company or where equipment has a long usable life (like most heavy power tools), then those businesses may be better served by purchasing equipment.

Whatever you choose it’s important to protect one of your business’s most precious assets. Truck Assist’s Drive Pack Truck Insurance package is a well thought out solution for small businesses who are seeking to protect their company vehicle. Get a quote online to see how we can have your back on the road. Please note appropriate insurance cover will depend on your business, so please consider whether Truck Assist’s product is right for you and your business needs and consult the relevant PDS and TMD.

This blog is a general information guide only and does not contain a definitive list of regulatory requirements which you must meet as a business owner. Businesses are required to comply with all laws, regulations and codes of practice by identifying their risks, and develop and implement control measures tailored to their circumstances, and you must seek independent advice to assess your circumstances. Truck Assist bears no responsibility, and shall not be held liable, for any loss, damage or injury arising directly or indirectly from your use of or reliance on the information in this article.