lease or buy??

UK PROFESSIONAL DRIVERS FORUMS OWNER AND FLEET OPERATORS FORUM (INTERACTIVE)
1

im doing some serious research about getting my own unit and start up as a OD . Im just wondering whats the pro’s and con’s of owning to rent/leasing a truck??
i believe ( please correct me if wrong) that the following pro’s and con’s are as follows:-

Leasing buying
pro’s paying £kkkk for a truck/finance
one bill fuel, wages , parking up costs
No servicing costs service and maintance bills ( including days lost to breakdowns)
Only insurance, fuel, wages, and parking up fees. saving for replacment truck.

Any comments are welcome but be gentle he he :grimacing:

2

One drawback to leasing is that I have heard horror stories about enormous end-of-lease charges being added for very minor damage, the lessee being charged for a full respray because of a few stone chips for example.

3

if you are thinking of leasing a truck, you had best put a ■■■■ load of money away each month to cover the bill you will get when the truck goes back at the end of the term :open_mouth: :open_mouth: :open_mouth:

leasing is dead money, same as renting a house, but, it works for some people

if you take a truck on a 5 year lease, if after 2 years, you decide that it is not working and you want to send the truck back, tough, you will still have to pay for the full 5 years

if you buy a truck, and under the same terms, after 2 years, you can sell the truck and close the deal

just because you lease a truck, doesn’t mean that the servicing and maintenance are included, these are add ons to the package and the price

you can get the same level of servicing and maintenance if you buy a truck from a main dealer as you would if you leased a truck, it all depends on how much you want to pay

aftermarket R+M packages can vary in price, depending on what is or is not covered

if you take a truck on a 5 year lease, after 5 years, you have paid all the money and you have nothing at the end

if you purchase a truck over 5 years, after the term, you will still have an asset in the truck

depending on the type of work you are looking at doing, you do not need a brand new truck, a good used truck is available for between £10,000 and £15,000, obviously, if you wanted a Scania, you would double those prices :wink:

4

A strange thing about any R&M deal is that if you take out a 24 month contract, nothing will need replacing for the entire 24 months, then in the 25th month everything will need replacing. :wink:

Spanky’s points, all very valid. I looked at leasing but decided against it for all of those reasons, but especially the “lock-in”. I’ve only been going as an OD for two months but if I wanted to I could get out tomorrow and the most I would lose is a thousand or two on the truck, but would still come out ahead. If I leased and it didn’t work out then I would have little choice other than continue to trade at a loss for the full lease term.

5

Usually i agree with the guys above but not tonight, what you are doing is a financial transaction and has very little to do with being a haulier you could be a builder, fabricator or cake maker the same rules apply what you are deciding to do is choose between a handing over cash to purchase an item or paying someone an amount every month

What is written above is a little bit misleading based not on fact but hearsay. Firstly you need to find a good accountant not a book keeper to advise you and one that speacialise in capital and operating corporate tax allowances.

To dispell a few myths you can lease a vehicle and have an asset at the end of the lease you can also claim or a given a number of tax and capital allowances from the VAT man which over £100k are worth around £23k the thing is people dont know the difference between a capital lease and and operating lease a peppercorn rental and a capital vehicle company It is best to talk to an expert not a haulage boss.

On the subject of end of lease trucks and i often collect on behalf of companies like ryder, close and lombard. They will all tell you the majority of vehicles are never returned on time they would happpily have you keep paying for them

They want to keep you as a customer and if they are stupid about there fair ware and tear policy then you won’t be back the t and c are industry wide bvrla which is the goveningbody set a policy

In my experience the only time when there is arguements is when the truck goes back and it is in a wreckedstate i.e missing panel, bumpers cracked lens etc the thing is you would expect to part with you cash for something in that state so whyn do other people expect it if it has stone chips then that is consumate with a truck that has done 250k mikes not 2500 miles
And for what it is worth i have vehicles that i have purchased, that are on leases and that are in effec rented but can be returned if i want. A good lease has break clauses.

6

Nextdrop:
Usually i agree with the guys above but not tonight, what you are doing is a financial transaction and has very little to do with being a haulier you could be a builder, fabricator or cake maker the same rules apply what you are deciding to do is choose between a handing over cash to purchase an item or paying someone an amount every month

What is written above is a little bit misleading based not on fact but hearsay. Firstly you need to find a good accountant not a book keeper to advise you and one that speacialise in capital and operating corporate tax allowances.

To dispell a few myths you can lease a vehicle and have an asset at the end of the lease you can also claim or a given a number of tax and capital allowances from the VAT man which over £100k are worth around £23k the thing is people dont know the difference between a capital lease and and operating lease a peppercorn rental and a capital vehicle company It is best to talk to an expert not a haulage boss.

On the subject of end of lease trucks and i often collect on behalf of companies like ryder, close and lombard. They will all tell you the majority of vehicles are never returned on time they would happpily have you keep paying for them

They want to keep you as a customer and if they are stupid about there fair ware and tear policy then you won’t be back the t and c are industry wide bvrla which is the goveningbody set a policy

In my experience the only time when there is arguements is when the truck goes back and it is in a wreckedstate i.e missing panel, bumpers cracked lens etc the thing is you would expect to part with you cash for something in that state so whyn do other people expect it if it has stone chips then that is consumate with a truck that has done 250k mikes not 2500 miles
And for what it is worth i have vehicles that i have purchased, that are on leases and that are in effec rented but can be returned if i want. A good lease has break clauses.

That’s is a very fair point of view!

In my opinion its what fits your needs, it will benefit some people to purchase, especially if it’s specialised or intended to be kept for a long period. If it’s for a specific contract for a set time and you can make the math work, lease can be a great option if you have minimal savings.

7

Nextdrop:
Usually i agree with the guys above but not tonight, what you are doing is a financial transaction and has very little to do with being a haulier you could be a builder, fabricator or cake maker the same rules apply what you are deciding to do is choose between a handing over cash to purchase an item or paying someone an amount every month

What is written above is a little bit misleading based not on fact but hearsay. Firstly you need to find a good accountant not a book keeper to advise you and one that speacialise in capital and operating corporate tax allowances.

To dispell a few myths you can lease a vehicle and have an asset at the end of the lease you can also claim or a given a number of tax and capital allowances from the VAT man which over £100k are worth around £23k the thing is people dont know the difference between a capital lease and and operating lease a peppercorn rental and a capital vehicle company It is best to talk to an expert not a haulage boss.

On the subject of end of lease trucks and i often collect on behalf of companies like ryder, close and lombard. They will all tell you the majority of vehicles are never returned on time they would happpily have you keep paying for them

They want to keep you as a customer and if they are stupid about there fair ware and tear policy then you won’t be back the t and c are industry wide bvrla which is the goveningbody set a policy

In my experience the only time when there is arguements is when the truck goes back and it is in a wreckedstate i.e missing panel, bumpers cracked lens etc the thing is you would expect to part with you cash for something in that state so whyn do other people expect it if it has stone chips then that is consumate with a truck that has done 250k mikes not 2500 miles
And for what it is worth i have vehicles that i have purchased, that are on leases and that are in effec rented but can be returned if i want. A good lease has break clauses.

so, what about the various instances where the repair bill at the end of a lease is far more than the vehicle is actually worth?

8

Exactly some people have cash and no capital allowance me i,m just finishing my end of year and my accountant recommends to sell a couple of vehicles and lease their replacements i try to get my head around it and always ask her to round it up in blocks of 100k basically it the govenment collects less cash from me the thing is like some of us our specialist at what we do then some accountants are specialist. It is worth seeking one out

9

It is easy to get a repair bill for a vehicle and it be higher than the value of the truck ussually it when someone decides to lease a vehicle at say 3 years old direct from a dealer usually targeted at an O/D based on a nice clean truck affordable repayments and the option of a service package. Said truck is say worth £20k at the end of the lease because the truck isn,t in the best of condition with no history it is worth £6k yet they are expecting back in condition consumate with being a 9k truck

So lease co says here is the bill for you damage no parts sourced of ebay here no spray shop on the cheap you could easily cop a bill for 6k my advice is sometimes deals are to good to be true buyer beware

10

i know someone who had a £15k repair bill for a truck that was valued at £9k

11

the way i see it, a bought truck is an asset in your company and a lease {payment} would be classed as a liability on your balance sheet

12

there’s one thing you could do. set up two ltd companies.
one for your o’licence and invoicing.
the other owns the lease on the truck. if they play at silly buggers at the end of the lease, then dissolve it.

13

The trouble with that is that they want to see a company’s O licence before they will lease a truck to them.

14

Nextdrop:
some of us our specialist at what we do then some accountants are specialist. It is worth seeking one out

But when was the last time you heard of an accountant running a haulage business successfully? Wasn’t MJM International run by an accountant back in the 80’s, they ran old LHD Scania’s and seemed to be doing OK till they leased those MAN Roadhause’s, they folded within two years of getting them!!

Ross.

15

shuttlespanker:
i know someone who had a £15k repair bill for a truck that was valued at £9k

I presume that must have been leased without a full R&M contract, difficult to see how £15k of damage could be done without an insurance claim being involved.

I have lease hired/ contract hired for the last ten years but always on a full R&M contract. Not the cheapest but no unexpected large mechanical bills gives me peace of mind, and I have regular, if not very profitable work. The last vehicle went back to MB last year, return costs including some body damage and repainting £2300 and this included a lump of excess mileage and that was my fault for underestimating. Normally work on 120000km but tried to be clever and got lease on 100000, gamble didn’t pay off.

I am no accountant but as far as I am aware there are different forms of leasing, lease hire and lease purchase, possibly more, the latter is basically the same as hire purchase.

16

matamoros:

shuttlespanker:
i know someone who had a £15k repair bill for a truck that was valued at £9k

I presume that must have been leased without a full R&M contract, difficult to see how £15k of damage could be done without an insurance claim being involved.

I have lease hired/ contract hired for the last ten years but always on a full R&M contract. Not the cheapest but no unexpected large mechanical bills gives me peace of mind, and I have regular, if not very profitable work. The last vehicle went back to MB last year, return costs including some body damage and repainting £2300 and this included a lump of excess mileage and that was my fault for underestimating. Normally work on 120000km but tried to be clever and got lease on 100000, gamble didn’t pay off.

I am no accountant but as far as I am aware there are different forms of leasing, lease hire and lease purchase, possibly more, the latter is basically the same as hire purchase.

simple

if a panel had a scratch on it, they were going to replace the panel with a new one, instead of rubbing down and spraying, when the new panel needed spraying anyway, i was told this when i looked at taking a brand new truck on lease

a few panels, the bill soon mounts up

wear and tear items were billed for too

if there was a small hole in the dash where a phone kit was fitted, they would bill for a replacement dash (and then probably get someone out to repair it)

basically, i was told by the dealer that i would be receiving a bill of between £6000 and £9000 for repairs when the truck went back after 3 years

how they could work that out before i had even took the truck, is beyond me :imp:

17

My thoughts echo those of Spanky. In three years time my truck might be worth £10,000. If I’ve bashed it about a bit I might have to knock a thousand off of that, or spend a weekend up the yard with some filler and some spray paint. I might have to put some second hand parts on it. It won’t cost me several thousand pounds to put right.

18

Excuse my ignorance ,though after reading the posts i am slightly confused…

It has been mentioned leasing a vehicle from a dealership with no service history…Surely dealers won’t lease a vehicle with no history ,i’d imagine it is one they have previously maintained…If no history surely it would go to auction or sold on

With damage at the end of life …obviously certain damage can’t be avoided …but what is to stop the owner prior to handing the vehicle back ,getting the repairs done himself ? So any scratches are rubbed down and painted,and panels not replaced.If it has an alloy fuel tank get it polished,as we said in the army ■■■■■■■■ baffles brains…Spend some money on a professional valet and a good steam clean.It’s down to presentation though the FTA seem to go banzai when checking a vehicle over…Though if you are in a job that is high risk of damaging the vehicle and getting the interior ruined then you are guaranteed a huge end of lease bill…So getting the best R&M deal is of paramount ,even if you can get them to include bulbs.As every penny counts

19

My experience has mainly been with MB both new and secondhand, once with a finance company on a seconhand Actros ,MB wouldn’t take the risk of two vehicles at the same time. In every case a fair wear and tear policy has been agreed(issued) with/by the leasor and certainly would not include new panels for minor repairs, I have never had large return charges though they always find something.I have also had body repairs carried out prior to return in order to retain financial control, this option has always been included in the fair wear and tear policy and have never had problems though the repairs must be up to standard.Before the last Actros was returned I did a few minor repairs myself including ‘spotting in’ stone chips(lots) on the front of a megaspace, this was accepted by Wentworth Park and they are quite fussy but in my experience fair.
Comply with the fair wear policy and use a bit of common sense.

20

norb:
Excuse my ignorance ,though after reading the posts i am slightly confused…

With damage at the end of life …obviously certain damage can’t be avoided …but what is to stop the owner prior to handing the vehicle back ,getting the repairs done himself ?

Because, no matter what you do, they will be determined to screw a huge end-of lease payment out of you. I would bet the farm that no small haulier has ever handed a truck back and been told “That’s fine, you’ve looked after it really well, there’s nothing to pay”.

Basically, they lease you a three-year-old truck and they want a three-year-old truck back, even when it is six years old.

Leasing works for a mid to large sized haulier who is in a position to take his trade elsewhere, but for a small haulier it’s a non-starter.