Deciding Between Buying Or Renting A Service Truck: A Comprehensive Guide

Having the right tools and equipment is crucial for business. When it comes to service trucks, you have a big decision to make: should you buy or rent? Both options have advantages and disadvantages, and your choice will depend on various factors, including the size of your business, budget, and long-term plans.

In this blog post, we'll take a closer look at the pros and cons of both options, pitting them against each other on three major sets of important factors for a comparative analysis so you can make an informed decision and choose what’s best for your business. Whether you're a small startup or a well-established organisation, the right service truck can make all the difference in ensuring your company runs smoothly and efficiently.

1. Initial Investment & Return

Buying A Service Truck

Buying any asset involves a significant upfront cost, which is a big investment. In most cases, it means getting a loan and dealing with all its hassles, especially credit checks. Getting a loan for a service truck purchase can be difficult if your credit isn’t good. You may still be able to get a loan, but you may have to pay a higher interest rate or provide a co-signer or collateral. You may also have to look for alternative lending options, such as a personal loan or a loan from a non-traditional lender.

However, buying a service truck means you can build equity in it as you pay off the truck and its market value increases. This can be seen as a form of savings or investment. For example, if you buy a service truck for $50,000 and make monthly payments towards the loan, as the loan balance decreases and the truck depreciates less, the equity in the truck increases. If the truck is sold for $45,000 after several years, your equity would be the difference between the sale price and the remaining loan balance, i.e. $5,000.

Building equity in a service truck can provide a financial cushion for a business and can be used for other business expenses or investments. However, it's important to keep in mind that the value of the truck can also depreciate, and there's no guarantee of a return on investment.

Renting A Service Truck

Renting a service truck requires a lower initial investment compared to buying one, making it a more accessible option for businesses with limited funds or those that want to conserve cash. This means you avoid taking out a loan and can get a service truck immediately to reduce downtime and get your project running as soon as possible.

However, renting a truck costs more in the long run — for long projects that may take several years or even decades, renting means constantly paying rental fees without building any equity in the vehicle as the rental payments go towards the use of the truck but don’t contribute to ownership of the vehicle. You can only either return the vehicle or extend the lease period once the lease term ends.

Conclusion

Purchasing a service truck is better if securing the required upfront financing isn’t a major issue for your business, and you’re engaged in a long-term project that will let you fully leverage your vehicle for years to come.

On the flip side, if you’re working with limited capital, loans being out of the question, and your project is relatively short-term, renting a service truck can be a cost-effective short-term solution for businesses, providing access to a vehicle without the large upfront investment required for ownership.

2. Recurring Costs & Responsibilities

Buying A Service Truck

Buying a service truck means complete vehicle ownership, meaning you’re fully responsible for its maintenance, repairs, and upgrades. Although this is a nagging recurring expense, it can result in lower operating costs in the long term compared to renting if you properly manage these since you’re only paying for occasional maintenance and repairs, insurance, and fuel.

Additionally, you get several tax benefits for owning a service truck:

• Depreciation: The cost of the service truck can be written off as a tax-deductible expense over several years through a process called depreciation. This can reduce the taxable income of the business.
• Vehicle expenses: Businesses can deduct the operating costs associated with a service truck, including fuel, maintenance, repairs, insurance, and vehicle registration fees.
• Interest expenses: If a loan is taken out to purchase the service truck, the interest paid on the loan may be tax-deductible as a business expense.

It’s recommended that you consult a tax professional to understand the tax benefits and requirements of owning a service truck. The tax laws and regulations can be complex, and it is essential to have a clear understanding of the benefits and obligations to ensure maximum tax savings.

Renting A Service Truck

Renting a service truck offers several benefits in terms of recurring costs and responsibilities associated with vehicular ownership. First off, you have a predictable monthly expense, as the rental fee is fixed for the length of the rental agreement. This can make budgeting and financial planning easier for a business. Plus, maintenance and repair duties fall on the rental company, reducing the costs for the business, although there may be additional fees associated with the lease term.

Furthermore, renting a service truck eliminates the responsibilities that come with ownership, such as depreciation, insurance, and vehicle registration. This also means that businesses only pay for the service truck when needed, which can result in lower overall costs than owning a truck that may sit idle for extended periods.

However, it’s crucial to consider the long-term financial impact of renting, including the ongoing rental fees and the lack of building equity. A thorough cost-benefit analysis can help businesses determine the best option regarding recurring costs and responsibilities.

Conclusion

If you want lower operating costs in the long run and enjoy several tax benefits for your business simultaneously, having full knowledge of what you’re doing, buying and owning a service truck can be ideal.

However, for a fixed monthly expense without worrying about maintenance and repairs and to avoid the inconveniences of vehicle ownership, renting could be the better option.

3. Flexibility & Customisability

Buying A Service Truck

Buying a service truck means you have complete ownership of it. You get increased flexibility, as you can use the equipment for multiple purposes and keep it for as long as needed. You can use it for anything you want and fully leverage it to your benefit, whether it is for work or otherwise. Leasing it to another business or project for some time is also an option if you’re not going to be using it for a while. All this can greatly improve your operational efficiency, saving ample time and resources in some situations and even net you some extra cash.

Additionally, ownership means you get full control over the vehicle, allowing you to freely modify and upgrade as you see fit to meet your specific needs. You can add storage compartments, a customised bed, or specialised equipment and install an additional ladder, lighting, or any other modifications and the latest technology and safety features to improve efficiency and productivity. You can also improve branding by customising your service truck with your brand colours and logos for better brand recognition and advertising.

However, it should be noted that upgrades and modifications can be expensive. If you’re still paying off the loan, you may not be allowed to customise your service truck unless it’s included in the loan agreement.

Renting A Service Truck

Renting provides the flexibility to discontinue using the current vehicle and choose another service truck without having to sell the old vehicle or incur high costs. This means more easily upgrading to a newer model when necessary, which can improve efficiency and productivity. You also get access to the latest technology without the cost of upgrades. This can be a cost-effective short-term solution, with the added benefits of reduced responsibilities and access to a wider range of vehicles.

However, rental contracts often include clauses prohibiting modifications, limiting the vehicle's functionalities beyond specific job sites and tasks. You also won’t be able to use the service truck as collateral or lease it to someone else or another project.

Conclusion

Buying a service truck is excellent if you want complete ownership and control over the equipment. You’ll be able to modify it and customise it as you see fit, with more flexibility due to no major restrictions on how and where you use it.

On the other hand, go for renting if you’re a business with changing needs, as you can simply rent a different vehicle as needs evolve. It’s also great if you want the latest models and upgraded technologies on your service truck without investing heavily in such modifications yourself.

Summary: Buy Or Rent A Service Truck?

Buying a service truck typically requires a larger upfront investment, but in the long run, it can result in lower operating costs, several tax benefits, and potential equity built up in the vehicle. You also get the freedom to do with it whatever you want, which offers its own perks. However, owning a truck also means taking on responsibility for maintenance and repairs, the potential for the truck to depreciate in value, and incurring high costs in upgrades and modifications.

Renting a service truck has a lower upfront cost, but the rental fees can increase over time and potentially result in higher long-term costs, even if you avoid maintenance and repair duties. It can be a great cost-effective solution for the short run, letting you jump right into your project with whatever service truck model you desire, but you can only use it as per the terms in the lease agreement.

It’s clear from this comparative overview that both approaches have their own unique advantages and disadvantages when it comes down to having a service truck for your business needs. Before deciding, carefully consider all factors and weigh the pros and cons of each option for your specific scenario, including the financial impact, job requirements, flexibility, insurance, taxes, financing options, etc. At the very least, ensure you make your decision after analysing your financial situation and long-term goals.

Plantman offers both service trucks for sale as well as rental options with flexible lease terms on a customer-first approach. Contact us today or call 08 9274 7820 for more information on service trucks and to choose your service truck. Or you can simply fill in the form below, and one of our team members will contact you directly to discuss your needs.

Our specialists are happy to help you make an informed decision in getting the perfect equipment for your business with the ideal approach.