When you're considering buying one or more trucks for your business, the question arises: is it better to go for a brand new model, or can a used truck be a better investment?
To a great extent, it depends on the type of truck we're talking about, and how it's going to be used. However, it is possible to look at some general factors to take into account when you're making your choice, so in this article, we'll take a look at the benefits and potential drawbacks of each.
New Truck vs Used Truck
- More reliable and low maintenance cost.
- Warranties and guarantees on specific parts.
- More choices of color, and interior and exterior options.
- Lower fuel consumption.
- Low interest rates on loans for new trucks.
- Probability of accidents is reduced.
- Lower purchase cost.
- Old truck can be in good condition, you need to verify it.
- Some old truck dealers offer warranties, need to confirm its validity.
- Lower loan amount and insurance premiums.
- New truck will cost more than a used truck.
- Depreciation - Massive drop in the value.
- Higher insurance premiums.
- Potential loss of performance.
- Expired warranties and guarantees, need to confirm with dealer.
- Routine costs will be higher.
- Old truck life is shorter.
- Lack of choice - color, interior and exterior.
The benefits of purchasing a new truck
Reliability
First of all, and perhaps most importantly, you can expect it to be trouble-free and reliable. If your customers rely on you to deliver on time, you'll have peace of mind as the chance of a breakdown is remote. It will also come with comprehensive warranties and guarantees on specific parts, so in case of any problems, you won't incur expensive maintenance or repair costs.
You choose the specs
New trucks can be customized to some extent, offering more choices of color, and interior and exterior options. This can be important when you come to add your branding and marketing messages and the background needs to blend with the colors of your logo.
Lower fuel consumption
Due to improvements in technology, new engines are likely to be more fuel-efficient than older ones. So, in the long run, you could be saving on running costs.
Financing
Banks tend to offer more attractive rates on loans for new trucks rather than older ones.
Safety
Drivers tend to be more careful when driving a new vehicle than one which has been heavily used, so the probability of accidents is reduced. That does not only reduce the possibility of injury to your employees, it also helps to avoid insurance claims which will affect your premiums.
Disadvantages of purchasing a new truck for your business
Purchase cost
Although you may be able to negotiate some discount, a new truck will always cost more than a used equivalent.
Depreciation
Consider that the depreciation on a new truck, for example, a Ford F-150 pickup, with a purchase price of around $50,000, will depreciate by over $14,000 in the first year. Although the depreciation rate is less eye-watering in subsequent years, it is worth asking if there's a way to avoid this massive drop in the value of your investment.
Insurance
Expect to pay higher premiums on a new truck, including bobtail insurance, because of the higher value of the vehicle.
Benefits of buying a used truck
Lower purchase cost
If you're just starting out in your business, or money is tight, it makes sense to economize with a used truck. As a nearly-new vehicle will experience the heaviest depreciation in the 12 months year, buying a truck that's just over a year old could present a great bargain. Check the mileage and you may be pleasantly surprised.
Condition
If you're buying from a reputable dealer, you can expect that the vehicle has been checked and is in good condition. What should you look for in the company you buy from? It's generally recommended that you buy from a local business, because, in case of any problems, they'll be on your doorstep. For example, if you're in Baltimore, visit several Baltimore truck dealers, before making your choice. This way, you'll get a feel for the quality of their service, and commitment to ensuring you're satisfied with your purchase.
Warranties
If the vehicle is 'nearly new' the manufacturer's warranties may still be valid. Also, if you buy from a reputable dealer specializing in used trucks, check that they offer strong warranties. That way, you'll have the confidence that the vehicle will have been thoroughly inspected and is in good condition when you buy it. Dealers care about their reputation, and they won't want to incur the labor costs involved in carrying out repairs on vehicles they've recently sold.
Disadvantages of buying a used truck
Performance
The performance of older trucks can't be compared with newer models. However, any potential loss of performance can be mitigated if you go for a fairly recent model. Alternatively, you could use the savings you made by not purchasing from new, and select a more powerful used model.
However, it's still a fact of life that a used truck may break down from time to time, especially if it's used for heavy haulage. So ensure you factor in repair costs and potential loss of reputation due to delivery delays.
Expired Warranties and Guarantees
As the manufacturer's warranties are likely to have expired, the only option you have is to ensure the dealer will provide one. These are likely to be short-term, however, so the cost of repairs could mount up.
Higher Running Costs
Older trucks are less fuel-efficient so routine costs will be higher. Choosing a truck that's more than five years old is unlikely to be a good investment, as there's an increased likelihood of breakdown as components age. Therefore, you'll also need a higher budget more for repairs and maintenance.
Durability
Another possible disadvantage of used trucks is that their useful working life is shorter, so you'll have to be ready to trade yours in on a more frequent basis.
Specifications
The interior and exterior specs of the truck may not be what you need. Respraying the bodywork so that your branding can be added, will increase your costs. Minor damage, which doesn't affect performance, may not give the right impression of your business, so would need to be repaired. Also, you'll need to take the comfort of the interior into account, if you want your drivers to avoid muscular and skeletal issues caused by long hours in the cabin.
Conclusion
All the above points can influence your decision to buy a used truck. Before making your decision, consider the age of the truck, the mileage, whether it is appropriate for your current and future needs, and the ongoing running costs. Good luck in making the right choice for you!