New or Used Service Truck, Which is Better?
So is it better to buy a new service
truck or a used one for your business? Pretty much hands down you are
better off buying a used truck. The debate of new verses used is
pretty one sided in my opinion. Here are some things to chew on when
deciding for yourself.
That new truck smell is intoxicating.
The Odometer at 000006 is so cool. Everything looks just perfect. But
when you drive it off the lot you have just lost $3,000- $5,000.
Don't believe me, try selling it back to the dealer after 2 months
and you will see this is a fact.
A new truck will lose half of it's
value in the first two years. Yes, you get a reliable vehicle and you
won't really need to do any maintenance for a couple of years but you
pay for it. What about the 50,000 or 100,000 bumper to bumper
warranty? Chances are you will never use it, that is why they give it
to you. And you pay for that also in the vehicle mark-up.
Edmunds.com has a good article on the
sweet spot for buying a used car. It falls right after year two of
the model year. So a 2015-2014 truck would be ideal for the 2017
model year.
Buying a used service truck is the way
to go. You let someone else take the hit on the first two years of
depreciation and you also get it at a much lower price. I suggest you
save up cash to buy your service truck.
I bought my 2005 Nissan
Frontier cash 11 years ago and haven't had a payment since. As you
can see from the video if I purchased a new truck every 5 years and
made the average payment of $479 each month I would have paid close
to $64,000 over that period. Instead, I have payed $00.00.
Of course there is maintenance cost for
an older vehicle. I just had new tires put on for $700.00 but that is
still less than 2 months of truck payments. I figure I average about
$1,500 a year on maintenance, some years lower than others of course
but I think that is a fair average. Even with a new truck with the
amount of miles you will put on it there will some maintenance costs.
So overall keeping an older truck running is still much cheaper in
the long run.
My truck has close to 200,000 miles on
it and I have changed a ton of parts on it. But it still looks and
runs good and I plan on keeping it for another 5-8 years if I can.
There really is no good reason to get rid of it and I am driving it
into the ground as it is. The mileage alone will destroy the value of
any service truck.
And speaking of mileage the IRS is
generous enough to give you a 53.5 cent deduction per mile for the
2016 tax year. But the IRS will only allow you to deduct either the
vehicle expenses or the mileage but not both.
So if you think that by
deducting your truck payments you are driving for free your not
really. Because you will loss the $7,000 to $10,000 mileage deduction
off of your gross income which will drop you down 4 or 5 tax
brackets. So making payments and deducting them is actually causing
you to loss more in the long run.
So before you get truck fever and go
out and buy that nice new service truck, add up the actual cost of
it. Include higher insurance and registration rates as well as the
loss in value in the first two years. If you afford to burn money
then go for it. If you would rather save that money and put it to
better use, buy used verses new.
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