Most Australian businesses rely heavily on trucks for various transportation purposes. They generally take on lease or purchase trucks to transport multiple things like plant and machinery, specialised payloads, goods, etc. Many businesses feel that buying a used vehicle is better than getting a new one as that might help in reducing the initial cost.
Purchasing a truck is a significant investment. When buying a heavy vehicle, it is essential to understand that acquiring new trucks for sale is always better than buying used ones. This is because new cabs have high residual value, for which reason brokers and lenders consider them as assets with a lower risk.
Even business trends confirm the same. According to research reports by the Australian Bureau of Statistics, in July 2016, businesses in Australia were committed to commercial vehicle finance worth $1281M. In the case of leasing, they were committed to only $1M in used trucks, whereas $13M in new heavy trucks. Also Read: NFTs In India: A Fad Or The Future
Now the question arises, if the asking price for new vehicles is so high, how can buying a new truck instead of an old one be more cost-effective? The reasons are as follows:
New Trucks Can Generate Return on Investment.
The overall cost of buying new trucks is lower when considered over a period of time. This is because an initial heavy investment in a new truck for business purposes is likely to give a handsome return on that investment as it performs like an asset. Here, driving the vehicle is part of how the business makes money. Newer trucks have better active and passive safety features installed in them, and they are also more fuel-efficient, aerodynamic, and advanced than the older models.
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New Trucks Can Reduce Repair Costs, Maintenance, and Time Off The Road.
Purchasing new trucks can help in avoiding spending too much time off the road. They perform the best since they are at the beginning of their lifecycle, and they do not require regular maintenance or constant mechanical repairs. On the other hand, the depreciation value for older trucks is much higher. Moreover, the cost of maintaining these trucks and keeping them roadworthy is also more than new trucks. Repairing them can also be expensive as many manufacturers phase out older machine parts to accommodate more contemporary models. All these things only add up to the bill and increase the overheads.
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Business Finance Products are Cash Neutral.
One significant benefit of buying new trucks for sale is their high residual value. Hence, brokers and lenders determine them as assets having lower risks. The rule of the finance market is that lower interest rates are charged for low-risk purchases. The two most prevalent business finance products that truck purchasers have at their disposal are hired purchases and chattel mortgages.
Both the options work similarly, where a mortgage is placed on the truck until the loan is paid off. However, a hire purchase is recorded on the business’s balance sheet as an asset, whereas in a chattel mortgage, the truck’s ownership is rented out to the company by the lender. However, both offer the flexibility of borrowing more money than the total value of the cab so that permits, insurance, training, and other residuals can be financed. Also Read: Top places to visit in Neil Island, Andaman!
Buying a truck or a fleet of trucks is no minor deal, and it requires a lot of consideration and calculations. However, this article establishes that purchasing a new truck is always better than a used one, and the good news is that many truck dealers across Australia are auctioning new trucks for sale to get a good deal. Purchasing a new cab from them is a good idea as they sport a variety of options in the latest models.