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.

https://www.edmunds.com/car-buying/drive-a-nearly-new-car-for-almost-free.html

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.