Buying your own semi-truck is a big investment, but it can be a very worthwhile step to take as a truck driver. Not everyone is able to afford to make this investment, however, leasing is the next best option for people in this position. If you have been wondering if you can afford to lease a truck, you should look at all of the factors that contribute to the cost of this commitment before you decide to make it.
Leasing a truck from a dealer will cost you about $1,600-$2,500 a month for a new truck and $800-$1,600 for a used truck. Leasing from a carrier will cost $800 to $900 because you will be committed to that carrier. In the first case, you will likely have to put a down payment of $1,000 while carriers will offer $0 down.
The above cost does not include fuel, maintenance for the truck, your insurance, or any repairs.
If you want to learn more about the cost to lease a semi-truck, read on!
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Average Costs to Lease a Semi Truck
There are different leasing costs for different kinds of trucks. You might need to consider the kind of truck that you will need to drive when you are budgeting for your leasing option. Some leasing companies will offer a flat rate for most kinds of trucks, but that is not always the case.
| Tankers | Flatbeds | Reefers | Intermodal Trucks |
|---|---|---|---|
| $800-$900 a month | $800-$900 a month | $900-$1,000 a month | $700-$850 a month |
There are other costs that you will be responsible for as well when you lease your own truck. You should keep these in mind and look into what they will be for your area before you commit to a lease. Your area might affect the overall costs of these additional fees and services, and you should look into your local area’s pricing before you start calculating how much you will spend for your lease each month,
| Insurance | Tax and Interest | Depreciation | Fuel | Maintenance |
|---|---|---|---|---|
| $800-$1,500 | Depreciation + interest x local sales tax | Capitalized cost- residual/ term of lease | $4,000-$6,000 a month | $12,000- $15,000 a year |
These costs can vary in your area, as fuel costs and insurance can be variable per state. You will also find that some of these costs can vary from year to year as inflation and other factors can change the amount that you will pay per month.
You will have these considerations in your overall costs even if you buy your own truck.
The associated costs for maintenance, fuel, taxes, and insurance are not avoidable and will factor into the cost of using any truck that you have access to through a lease or a purchase. You might not have to think about these factors if you are not maintaining or owning your own truck at this time, but the considerations that every business owner will know about.
Factors That Can Affect Your Overall Cost Besides Regular Costs
There are other factors that can affect your overall monthly cost. The age of your truck can greatly impact the maintenance that it will need each year. You might find that you are spending a lot on basic maintenance if your truck is used or is older. These costs can really cause your leasing costs to skyrocket.
New trucks are much easier to maintain and you will have a better time with this part of the overall costs if you are not leasing a used truck or an older truck.
One of the most important parts of the leasing process is to make sure that you look at the truck carefully before you accept the lease. Any issues that the truck has at the time of the lease need to be pointed out and handled by the company before a lease is signed.
The amount that you drive can also impact your leasing arrangement. Just like with a car lease, you will not be allowed to drive in excess of the leasing agreement.
If you exceed the lease agreement mileage limits, you will be charged a fee for each additional mile that is driven. You need to be aware of the mileage that you need to drive annually before you engage in a lease that does not allow you the necessary mileage for your job.
Your credit rating can also impact the leasing cost that you are offered. Credit institutions will always offer you pricing related to your credit rating, so you need to be aware of this factor if you are going to be financing your lease. This can be a big factor in the interest rate that you are offered as well as the amount that you will pay over the life of the loan.
The number of vehicles that you are leasing can also impact your overall costs. You might find that if you need to lease more than one truck for a business, you will be offered an incentive to make this more affordable for your needs. Leasing a fleet can be much more cost-effective than leasing a single truck, but this would of course only apply if you have your own business.
Customization of your truck can also add to your leasing costs and you might have to pay to add needed items or alterations to your truck once you are leasing it. This might include tailgates, bed liners, toolboxes, signage, racks, and other kinds of lift gates. These might be required for your job but not be available on the truck that you are considering leasing right off the lot.
How Are Leasing Rates Set?
Leasing rates are a combination of three factors. These three factors will combine to make your overall monthly leasing cost for your truck. The three factors are interest, taxes, and depreciation.
Depreciation
This is the largest portion of the lease and will have the biggest effect on your lease’s cost. The actual depreciation of your loan can be figured out through the use of a formula.
This formula is the capitalized cost minus the residual and divided by the term of the lease.
The lease agreement is made to protect the leasing company from getting back a vehicle that they cannot resell or use for another purpose and this figure is part of their cost for lost value on a new truck that they are leasing to you.
Taxes
The amount that you pay in tax is related directly to the taxes in your state. In many states, the lease rates are required to invite taxes for both interest and also depreciation payments.
This means that you can calculate your cost by taking the monthly depreciation cost and adding it to the interest on your loan and then multiplying it by the local sales tax rate.
For locations that have a high sales tax, this can be a larger part of your overall leasing costs than in places that do not have this consideration affecting their leasing rates.
Interest
This is the factor that makes it possible for the leasing company to actually make a profit off of leasing to you. The lease acquisition fee and monthly interest are affected by the condition of the vehicle. The interest will be calculated based on a formula as well. The capitalized cost is added to the residual value and multiplied by the money factor. The interest can also be affected by your credit and your overall debt to income-ratio.
Other considerations that you need to keep in mind for your lease are related to the actual amount that is due and other fees.
Amount due
The lease agreement will state exactly the amount that you need to pay when you sign up for the lease. This will include the down payment. The agreement will break down any fees or credits and rebates that will affect the total amount that is due. If you had a trade on your agreement, for example, this will reduce the total amount that is due.
Early Termination Fees
The agreement will explain fees that could be charged to you if you terminate your lease before the end of the agreed-upon period. When you end a lease early, you will often have to pay a very steep cost. You should always consider if this is really worth it as it could really add up and cost you far more than you think.
The Location of the Provider of the Lease
If you are in an area that has stiff competition for leasing deals, you might get a better deal overall.
In places that are large hubs for trucking, you will find that you might actually be able to get a much better deal than if you are located in an area that does not have a lot of truckers looking for leases.
You will also need to return your lease to the location where you got the truck from. You will have to pay additional fees if you do not return your lease to the same location that you signed at.
This is common for all leases and you will find that you will not get flexibility on this with many companies.
You will have a better variety of vehicles to choose from if you are working with a provider in a competitive area as well.
This can make it much easier to get into a new truck if you want or to find a specific truck with unique upgrades without having to pay additional costs to add these.
Insurance Coverage
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.
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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 payments 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 and 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 backup horns.
Reasons to Lease a Truck Rather Than Buying
The first reason that you might choose to lease a semi is because of the cost to purchase one. You will pay at least $20,000-$40,000 for a new truck and this is just a basic vehicle. If you are leasing, you will need less money down and you might not need to agree to any kind of financing to secure your lease.
You will also be able to upgrade your vehicle more often and you can get a lease even with bad credit. You will have a low down payment and there are sometimes lease completion incentives that might make the process easier to finalize and afford. These incentives can be as much as $18,000 toward a three-year lease.
You can sometimes lease to own as well, which might help you to actually get your own truck after all. You will have less financial risk overall as well, which can help you out if you are not in a position to undertake a big expense like buying your own semi-truck.
You might also be able to secure a lease without a down payment in some cases. If this is a big factor for you, then you should look for these kinds of lease agreements. This can be accompanied by the option to upgrade your truck frequently through the company that you are leasing from.
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Leasing a Truck Can be Affordable Compared to Buying
If you have been worried about how to afford your own truck, you will find that leasing can be a great option for your needs when compared with buying.
You will still have costs associated with caring for the truck and you will need to pay your own fuel and other fees, but leasing can be much more cost-effective than financing a purchase of a new truck.
You will find that leasing is often overlooked as a means to get into your own truck and many people are not aware that they can use this option rather than buying.
You will often be able to upgrade your truck more often if you lease and you will get access to better costs overall if you are in an area that has a lot of competition for leases.
Always look into all of the costs in your local area carefully before you commit to a lease, but in most cases, you will find that this will save you money.
Leasing a semi-truck can be a great way to get yourself into your own truck and have the freedom that you never thought you would.