Heavy-duty vehicles such as semi-trucks are high-cost assets. If you own a startup or a relatively small fleet, you probably do not have the funds to buy one outright.
In such a case, leasing a semi-truck is one of the best business decisions you can make.
By leasing a truck, you will essentially be paying the company that owns the truck for the right to use it for a preset period, say two or three years.
In this regard, the amount you will be paying to the vehicle owner should cover the depreciation of the vehicle over the lease period. This is why you will find most lease rates to be cheaper than auto loans.
But how exactly can you tell whether you are getting a fair rate for your leased vehicle? Based on the standard rates in the industry, leasing rates range between $800 and $2,500 a month.
This rate is not inclusive of insurance coverage, which may be as high as $1,500/month.
Throughout this guide, you will learn the various factors that will influence semi truck leasing rates.
Semi-Truck Leasing Rates: Average Costs
Although different providers will charge different rates for different semi-truck models, you should expect to pay $800 to $1,600 per month for a used truck.
Newer trucks will attract higher rates, with most providers charging between $1,600 and $2,500 per month for a new truck.
The total amount you will end up paying per month will also include other rates and fees. For instance, leased semi-trucks are known to attract insurance premiums of up to $1,000/month, as discussed below.
What Affects Semi Truck Leasing Rates?
Just as is the case with any other lease agreement, there are three main factors that will determine your lease cost for a semi-truck. The three include interest, taxes, and depreciation. So, how will these affect your lease rates:
- Depreciation – This accounts for the largest portion of lease rates you will be paying. In order to calculate the actual depreciation value for your lease contract, you should use this formula: (Capitalized Cost – Residual) ÷ Term of Lease.
- Tax – The amount you will be paying for taxes will mainly depend on the state you are in. In most states, it is a requirement for lease rates to invite taxes for both interest and depreciation payments. In this case, you should calculate the applicable tax as follows: (Monthly Depreciation Cost + Interest) × Local Sales Tax Rate.
- Interest – Now this is where the leasing company will be making its profit. In addition to the lease acquisition fee, the provider will also charge you a monthly interest based on the condition of the vehicle. This interest is calculated using this formula: (Capitalized Cost + Residual Value) × Money Factor.
Factors Affecting Semi Truck Lease Cost
As you can see from above, the three main components of a lease payment are dependent on several other factors. For instance, the tax rates will depend on the state you are in while the interest may depend on whether the truck is new or used.
In this regard, here are some of the aspects that are known to influence the cost of semi truck lease rates:
Part of your lease agreement will state exactly how much you will need to pay when you sign. This amount includes your down payment. However, the agreement should as breakdown any fees, credits or rebates that factor into the total amount due. For example, trading in an older vehicle will lower the amount due.
Early Termination Fees
The agreement should explain any fees you may be charged should you decide to terminate the lease before the end of the agreed period. Ending a lease early usually often comes at a steep cost
Location of the Lease Provider
The stiffer the competition in a certain State, the better the deals. This will also present you with a better room for negotiation. In some states like Texas, the prices may be slightly lower.
This is mainly because customers have a wider variety of vehicles to choose from, hence in a better position to find cheaper options.
Additional charges may be incurred if you return the semi-truck to another location different from where you picked it. Some of the leading providers will also charge you additional fees for returning the truck late.
This being the case, you may need to get a provider that is closer to you.
Age of the Truck
Trucks are expected to depreciate over time so the older the car is, the lower the rental cost. The newer the car is, the pricier it will cost to lease.
Age brings with it questions regarding durability, fuel economy, and maintainability which tend to reduce the demand for such trucks or cars.
New or near-mint trucks will be significantly more expensive than the ones that are more than 10 years old. You’ll need to factor in maintenance costs if the rental or leasing contract does not provide it.
Watch out for dents, visible marks, or hidden damages on the truck. It’s important to make these checks on the trucks before signing that lease contract.
Depending on the provider you choose, you may be required to buy a Loss Damage Waiver (LDW) or Collision Damage Waiver (CDW) insurance plan.
On average, collision coverage for a leased semi-truck will cost you between $800 and $1,500 a month. If you would like to save on the insurance premium, it is advisable to check whether you can use your own rental insurance with the leased truck.
Again, shopping for insurance prices beforehand will come in handy. If not careful, fleet insurance can amount to a lot of money. As a business owner, you can probably get a blanket policy to cover both your business and your fleet.
Distance You Will be Traveling
Most lease providers restrict the total mileage you can put on the truck during the leasing period. If you drive the truck over the distance stipulated in the lease agreement, the provider will charge you additional fees for each additional mile driven.
Be aware of policies regarding fuel charges too. Usually, if the rental company provided the vehicle with a full tank, you will be required to return it at the same level.
Otherwise, you may be charged up to two to three times the price of a full tank, regardless of how much was in the tank when you turned over the car
Your Current Credit Rating
As to may be aware, credit institutions and lenders normally check your credit score before deciding whether to award you a loan and the applicable rates. This is also the case with most semi-truck leasing companies.
If you happen to be tight on cash and have a poor credit history, you may find it relatively difficult to qualify for a truck lease with any of the leading providers.
This is particularly the case for no-down-payment and low-interest lease agreements. Such lease contracts are often based on your credit approval and history.
If you have a low credit rating, the only leases you will qualify for are the ones that require sizeable down payments and attract higher interests.
In such a case, you may also be required to pay a security deposit, depending on how bad the rating is.
While there are companies willing to offer a semi-truck lease for those with bad credit, such providers may charge down payments of up to $1,000 or higher.
Number of Vehicles You are Leasing
Though not standard, some of the best semi truck leasing companies will offer you a ‘bulk’ rate if you are leasing several trucks. This discount is often offered as an incentive and will mainly depend on the number of semi-trucks you would like to lease.
If you are looking forward to leasing several Smith trucks, you should enquire from your provider whether you qualify for such a discount.
Additionally, it is advisable to check the vehicle lease options and get a quote. By so doing, you can ascertain whether your business can actually afford the lease before committing yourself.
Leasing your fleet from a single provider may be more cost-effective economical.
Therefore, you should look around for a dealer that rents the types of vehicles you need instead of having to lease your pickup trucks from one dealer and your full-sized van from another.
Customizations and Add-Ons
Would you like to have your truck to be customized in any way? If so, you may end up inching higher lease costs. In most cases, seasoned rental providers will enquire whether you need any additional equipment in your truck.
Some of the add-ons you may ask for include tailgates, bed liners, lighting, toolboxes, signage, racking, and lift-gates-gates.
The same case will apply if you have health and safety requirements, such as the addition of fire extinguishers, first aid kits, and back-up horns.
Ready to Lease a Semi Truck?
If you need a semi-truck or several for just a limited period or just do not have enough funds to acquire one, you should consider leasing.
Though an attractive option, lease rates vary significantly from one person to another.
For instance, the rate you will pay will depend on your credit score, early termination fees, location of the provider and any add-ons you may require.
All in all, this guide will equip you with the essentials you need while hunting for a fair semi truck lease cost.