Financing vs. leasing a Truck: Weighing the Merits
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. 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 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 on expiry of the duration agreed or renew the lease contract.
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.
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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