Leasing truck vs buying outright in cash

Just because it's a tax write-off does not mean it good to spend the money on something. Your better off keeping the money as income for yourself. That why I can do consulting. If someone is just looking for tax write-off. I take checks ! it shows how people would not pay me consulting fee just for a tax write off.

If you buy a truck like others said you depreciate the truck. So you get the same write off as leasing. So your back to the basic idea of you want the cheapest truck per mile to operate. You want a truck built for MPG. It all come down to if you can run a truck more profitable per mile then the next person.

I will say running team it might be better to lease a truck because they put so many miles on a truck. They basically get a new truck every 2 years. When your running 220,000 miles a year. The truck is just tool. Running 20,000 miles a month and paying $4,000 for lease payment come out to $0.20 per mile. That good number, when I had my own truck and paying $1,800 a month for a used truck at 10,000 miles a month. That's $0.18 cents per mile. If your paying $4,000 a month for leasing and running solo miles of say 10,000 miles a month. That's $0.40 cents per mile. You will never go home and run yourself into the ground. Probably till you give up thinking you failed. That's why most people fail at leasing. Your almost set up to fail from the start. Because if you fail they get the truck back and lease it to another driver. Your taking all the risk but they control everything. You need to look at the per mile rate to see if it works for you. A used truck is cheaper to buy, but the repairs and the down time can kill the ability to make money. I had a used truck with warranty. They had to rebuild the engine under warranty. It was free but it took them like 10 days. I lost out on a lot of possible money because truck could not run. I still had to make the monthly payments and insurance and pay for hotel room and food.

 

A lease is not a lease, is not a lease, is not a lease.

There's at least four kinds:

1) lease purchase. See above. 99% sucker deals. Enough said.

2) Operating lease. This is where you rent the vehicle for xxx years, turn it in and walk away with nothing. The are pushed heavily by sellers -- why? Because they do not require a "truth in lending" statement which discloses the interest rate. So the dealer can do their smoke and mirror show and make you believe you got a great deal, all the while you're paying full retail and got 16.99% interest shoved up your keister.

3) Capital lease. This is the lease for xx years with the $1 buyout. It's treated like a purchase by the tax man, and it's just financing the vehicle. Again, no truth in lending statement, so dealers love this stuff!

4) Full maintenance lease. These are typically a cost per month plus cost per mile, and the lessor pays for everything: PM's, tires, brakes, the whole shebang. Of course, you'll be on the cheapest recaps possible, and absolutely minimum maintenance schedule. The larger outfits typically negotiate a "breakdown/ replace" provision which makes the lessor provide a temporary vehicle when a breakdown occurs. Pros and cons to running this type of operation, but if you aren't mechanically inclined and you have a contracted customer base, it can take a lot of risk out of the operation, since you know the exact operating costs of the truck. Truck broke? Not your problem.....

 

Problems start way before that. When solo complains they stick another solo until they find one happy with his or her degraded situation and does not complain.

We had a 2001 century that FFE gave us virgin with about 15 miles on the ODO. We put about 221000 on it in about 10 months. We recognized that while the tires were replaced every october without regard to wear for winter the brakes and clutch and so on were original. The alternators were what it likes to eat. About 3 a year. If they would just buy a alternator capable of lighting the whole USA and stop being cheap with reman replacements we would be fine.

The tractor also started to develop what I would call body wear. Squeaks, rattles and other noises which will only get worse as the thing is pushed towards 300-400K miles. You can bet since FFE leases the tractor, they don't really own it or care if it is replaced with a new leased tractor without all the maintenance headaches to wrenching a older truck.

Would we buy it? no. Its plastic. Disposable and replaceable. Not like some of the quality older Iron able to run 30-50 years.

 

Yes, older Maxxforce should be avoided. I’m not sure the newer ones are proven one way or the other yet.

Idle time kills the emission systems on these newer trucks. Finding one that’s had an APU since birth is a good start. Then if you do your due diligence and proper inspections you can find one in that mileage range that you should be able to run with confidence.

@Farmerbob1 has a good thread about a truck in this mileage range. He would be able to offer more insight on this topic.

 

Even Paccar has a lease purchase plan, I know guys that use it instead of the regular financing option and they do it for tax reasons, not money problems. You usually have a 1 dollar buyout at end of lease and you own it. I have worked for construction companies that did this with even their pickups, which they would let us pay the dollar and buy the pickup when it turned 3 years old.

 

A truck that has used an opti-idle system for any significant part of it's lifetime is going to have a lot of engine hours where the exhaust was relatively low temperature. PROBLEM. Low temperature exhaust gums up DPF filters more than high temperature operations.

I purchased a 2016 Freightliner with dd15 engine and the Detroit One-Box DPF system. The truck was a Crete truck, and had always had Opti-idle, never fitted with a APU.

At 499700 miles, 300 miles before the end of the warrantee, the One Box failed. It was replaced under warrantee. I was advised that the shop cost for a owner would have been about 12k.

Right now, at a bit over 568k miles, the truck is in the shop for an engine rebuild, bottom up.

The reason for this was a cracked head and scored cylinder from the leakage from the cracked head. I cannot prove it, but I have a sneaky suspicion that the head was weakened and eventually cracked because Crete was changing the oil at absurd intervals, and they were not testing the oil to make the changing decisions, simply X miles, do change. The head cracked 120k miles after I bought it, but a fault caused by oil degradation is not always going to show up quickly. The oil being more than a bit degraded over a long time could have led to slightly higher operating temperatures which never led to a critical failure, simply increased wear and perhaps metal fatigue or some loss of tempering, eventually leading to a cracked head. I'm not laying the blame for the problem at Crete's feet. I can't prove it, but I can disapprove of poor maintenance, and suspect it might have led to this failure without pointing fingers too accusingly.

I was the company driver in this truck for 250k miles before I bought it. I trusted that the truck was in reasonably good condition, because I didn't abuse it, and it didn't need excessive maintenance. All the maintenance it needed also made sense, as far as I knew. So I bought it. You wouldn't necessarily need to drive a truck for 250k miles to trust it, but being the driver of a truck is the best way to understand it.

TLDR;

1) I will never again buy a truck that has not had an APU for most of it's history. I was lucky and dodged the DPF system bullet, but another 300 miles and I would have eaten that 12k bill.

2) Any company that goes 50k miles between oil changes should probably also be avoided as the source of a used truck. I will never again buy a truck that does not have a history of oil changes no more than 25k miles apart. I suspect I am eating the results of that maintenance shortfall.

3) Buying a used truck is a gamble, in any case. Don't do it unless you can afford to lose.

 

I have heard very bad things about Maxxforce engines. I wouldn't own one. Same with older Paccar engines, though I understand that recent Paccars are much better. Cummins apparently has issues with oil consumption even on healthy engines. I would look for a truck with a dd15, if you are looking for a newer truck. I know nothing about the old school engines, but I do not think old school trucks are a possibility here.

 

The depreciation rules are the same as if the truck cost $150K. Choose one of two depreciation methods.

#1) Straight line:
Figure out the predicted salvage value the truck will have three years from now. Subtract that from what you paid for it, including tax and title fees. Divide the difference by three and deduct that amount each year for three years.

#2) Double declining balance:
Add up the purchase price, plus the tax and title fees. Deduct half that amount the first year, one quarter the second year, and one eighth the third year. The remaining eighth substitutes for the salvage value.