Discuss leasing as an option for private trucking

Answer 1

Private fleets require significant capital expenditure, and some firms find that they do not have access to that level of capital investment at an efficient rate. Leasing provides an option that reduces the necessary capital investment by the company.

There are two types of trucking leases, full service and finance lease. Both options give the lessee an opportunity to buy the equipment, at book value, at the end of the lease.

The full service lease is just as the name implies and includes not only the vehicle but also ancillary support services such as fuel, license, registration, highway and use taxes, insurance, towing, maintenance, and more. This type of lease makes sense if the lessor has the infrastructure in place to provide those extended services more economically than the lessee could.

The finance lease is more similar to an auto lease in that it is only a means of financing equipment. Under that lease the lessee pay a monthly fee that covers the purchase cost of the equipment and the lessor's finance charges but no services. This is a common method of leasing trailers which require minimal maintenance.
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Leasing also provides the ability for the lessor to pass on purchasing discounts. Typically a major lessor is able to get preferred rates, due to volume, from the truck manufacturer, then can pass on part of the savings to the lessee.