Dump trucks are essential equipment in high use across the construction industry. They are used for transporting loose materials such as dirt, gravel, waste, or sand, along with other transport of robust materials such as cement blocks and logs, and it is why dump truck leasing is the best option.
Buying a dump truck involves a massive investment since most of the latest models usually cost around $100,000 to $500,000. Leasing is a better option if you are looking for a dump truck for the short term or while you are getting a truck with little to no money to put down.
The terms and the rates included in the lease vary as it depends entirely on your business’s credit score. You should always expect higher lease payments if you are new in this business.
Alternatively, while planning to use the truck for a longer time, you can easily save money by leasing them for at least three years. Dump truck leasing for long-term projects is a wise idea, and it will help you save money as a twelve-month lease starts costing you around $20,000 every month.
Is it tough to finance a dump truck?
Financing a dump truck using a loan is a great option. The process is extremely easy, and you know whatever you can expect with a great credit score. You can easily go online and check the credit scores for financing the dump truck. Always ensure to carry every required document, including your credit reports. Since no one wishes to check their financial records, they get rejected. The other step involved here is to locate a lender.
Your credit score will significantly affect the interest rates, but you need not worry as you can easily obtain a dump truck loan even with bad credit. The rates involved for dump truck loans vary from five to ten percent.
You can easily save money on interest repayments with higher down payments. Additionally, ensure to shop around for the same. The rates change significantly between the lenders; therefore, make sure to shop around before making any decisions.
For several businesses, standard dump trucks are sufficient; however, specialized models are saving substantial operations costs. Additionally, paying for the dump trucks upfront will help you select your financing option, especially with equipment financing or dump truck leasing.
There are commercial trucks financed as hard assets by the equipment lenders and may involve a down payment. You can significantly change every model later on if you require any type of update if you do not wish to undertake the losses.
Can you profit by owning a dump truck?
Getting commercial auto insurance and a driver’s license is essential for this business. You require experience and a dump truck. Leasing a dump truck from a reputable company can retain the wheels by turning whenever you are learning the ins and outs of your business if you do not possess any of these things.
The following are a few steps involved in getting started in this line of business:
- It is a huge investment whenever you plan on owning the dump truck; however, the initial investment recoups. The cost of maintenance and fuel can affect your profit margin therefore dump trucks generally get about five to six miles each gallon.
- Whenever you have the requisite experience, you can easily start earning sufficient money to pay off every investment in a year. The entire industry is worth about $19 billion, and expected growth of 1.8% is maintained yearly over the next five years.
- The initial massive expense of owning a dump truck business is its fuel. The price of diesel has stooped down immensely, according to the US Energy Information Administration. But, it does not mean that you should start your dump truck business with a smaller fleet.
- You can easily work around normal business hours and generate money even while your dump truck is not in use. A dump truck business is an extremely lucrative venture, along with the rest.
Leasing Dump Trucks vs. Financing
The conditions and requirements for financing and leasing commercial vehicles are strictly similar to conventional leasing and loan programs. Several financing companies are more willingly approving the leasing and lending part for the commercial vehicles required due to the extraordinary amount of collateral associated with these kinds of vehicles.
For instance, the value of personal vehicles starts depreciating the moment you move them out of the seller’s lot. You can easily operate them for several years without this value getting a massive hit regarding commercial vehicles. The value of the commercial vehicle gets averaged by their work even while in use.
There are several benefits that are associated with leasing and financing options for commercial vehicles for the company. The main aspect involved here is in finding the one that is most beneficial to suit your needs. You are simply borrowing money to purchase the dump truck or the other commercial equipment with the help of a financing option.
The financial payments are structured as long as they are paid back in time. While buying the vehicle, you must claim the vehicle as an asset for your business; however, this claim depreciates as value becomes a liability.
Two Main Types of Leases
When you plan for a dump truck leasing or commercial equipment for your business, there are two primary leasing options available. The initial one is operating leasing and is primarily referred to as an off-balance sheet for liability. Here you are not claiming the equipment or the vehicle as an asset for the business.
But, whenever you file the taxes for your business, you get a chance to deduct the lease payments you make on your equipment or vehicle involving the cost of operations. Several companies allow you to buy the vehicle at FMV or fair market value, and several operating leases have low lease payments and fewer restrictions whenever you apply.
The other primary kind of leasing option you get is the capital lease. It is a form of lease that is extremely beneficial for people who have just started their business or have plans to own the vehicle for a longer time. It is the kind of leasing option you may have to categorize the equipment or vehicle as a liability for the long-term; however, it can easily deduct the interest being paid on vehicles as an added company expense.
Although payments for the capital lease are higher whenever the leasing period is over while you have the chance of buying the vehicle for less money. Several vehicle leasing companies will ask you to pay about $1 to $10 percent for the market value of the dump truck you are planning to own.
Closing thoughts
You should always remember that leasing is costlier than purchasing if you aim for a long turn. However, since dump truck leasing will involve little to no down payments, it is perfect for companies that are short on cash or wish to conserve their working capital. It even allows you to upgrade the entire vehicle fleet for a few years.
