SUMMARY
In this episode, Louis Massaro shares his thoughts on whether you should buy or lease moving trucks.
- “You could do everything by the book of what’s the right financial decision, but then there’s also convenience when acquiring trucks.”
- “What’s nice about some of these leasing programs that some of the Penske’s, and the Ryders, and these companies provide is that you get that new truck. You can wear and tear. If it breaks down, they give you a new one and the whole truck payment is the deductible.”
- “When you own the truck, you also have to take care of that truck. So, you have to think about, ‘Do I have a mechanic that I can rely on? Do I have a mechanic that I can trust? Do I know anything about trucks.'”
- “With moving trucks, it’s hard to find them slightly used. They’re usually pretty worn out. So, we would buy them new and finance them, make the payments on them for five years and then run them for another three years after with no payments and then sell them after that.”
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TRANSCRIPTION
Louis Massaro:
Janysh, “Financing versus leasing trucks? What do you prefer and why?” Great question. So, there’s no right or wrong answer. Let’s just start with that. It’s totally a preference thing. Now, you could do everything by the book of what’s the right financial decision, but then there’s also convenience, right? On a personal level, I like to lease my vehicles, because I want a brand new vehicle, and I want to give it back, and get another brand new vehicle in a few years, and I don’t want to take care of it. If anything’s wrong, I bring it in and they deal with it. Is that the smart financial play? No. The smart financial play on a personal level would be to buy a car that’s a few years old with a few thousand miles on it, buy it after it’s already taken the depreciation and drive it until it breaks down, right?
That’s the smart financial decision. So, from a trucks standpoint, I always bought trucks. Okay? And I bought them brand new, right? Which technically, when you buy, if you buy it used you, it depreciates right away, as soon as it comes off the lot. But the problem is with moving trucks, it’s hard to find them slightly used, right? They’re usually pretty worn out. So, we would buy them new and finance them, make the payments on them for five years and then run them for another three years after with no payments and then sell them after that. And that financially will be, over the longterm, your better move from strictly financial. But you can’t … You guys don’t just take the best financial decision into account, right?
Because when you own the truck, you also have to take care of that truck. So, you have to think about, do I have a mechanic that I can rely on? Do I have a mechanic that I can trust? Do I know anything about trucks, right? I mean, I had to learn the hard way when the diesel on one of my trucks froze up or jelled up, I should say, and I had to go prime the truck, and let the little air valve out, and it sprayed all in my face. I had to learn that stuff the hard way. And I didn’t want to deal with that, but I happened to have good mechanics everywhere that I went. Could I trust them? Eh. Were they padding the bill? Probably. Right? Were they charging me for stuff that I really couldn’t argue, because I didn’t know enough about the trucks? I’d say so.
Now with leasing, what’s nice about some of these leasing programs that some of the Penske’s, and the Ryders, and these companies provide is that you get that new truck. You can wear and tear. If it breaks down, they give you a new one and the whole truck payment is the deductible, right? So, when you buy a truck, every payment that you make, right? Only the interest and the taxes on that payment come off your P&L, right? And the rest is paying down your balance sheet. So, at the end of the year, when you buy trucks, it can make your P&L look like you’ve got all a lot of profit, but you don’t have the money. In other words, you’re like, “Oh, it looks like we’re profitable.” But yet, the bank account doesn’t show that.
Whereas with a lease, you’ve got every payment that you pay comes off your profit, right? So, it reduces your tax exposure. Now, I know I’m getting technical here, but I’m answering the question, right? This is the stuff you got to think about. With the truck that you buy, you do get to depreciate that which helps reduce your tax exposure. That’s all based on how you and your CPA choose to do it. So, I would say that, today, if I was starting over, I would explore both options. I would talk to my CPA. I would … At the time of when it comes to buy a new truck, look at where you’re at and see what you need from a tax standpoint, what your mechanic situation is, and then make the decision from there.
So, I like both ways. I’m not against either one. And that’s kind of my scoop, right? My reason why. You said, “What do you prefer and why?” That’s the reason why, but we did buy trucks, brand new, and there are trucks that you can get a brand new body with a used chassis. Go to my website, louismassaro.com. Search … Put trucks. It’s like movers guide to trucks, something like that. Just put trucks in the search bar. There’s a blog post there with my connections for buying a new truck, buying a new box with a used chassis and some leasing information as well. I hope that helps you guys.