Should I lease or buy a service truck?

The lease-vs-buy decision for a service truck mixes cost, flexibility, and tax considerations. None of the three is dominant in isolation; the right answer depends on your mileage, hold horizon, and growth trajectory.

When buying usually wins:

• You drive 20,000+ miles per year per truck (lease mileage caps add expensive overage)
• You keep trucks 6+ years (depreciation curve favors long ownership)
• Resale value at end of hold is meaningful (well-maintained service trucks retain value)
• You build equity that can be borrowed against
• Your cash flow can absorb the down payment + monthly loan payment without strain

When leasing usually wins:

• You're scaling fast and want to swap trucks every 3-4 years (better fuel efficiency, latest service-bay tech)
• Your annual mileage stays under 12-15K per truck
• Cash flow matters more than long-run cost
• You don't want resale hassle or trade-in negotiations
• You want to preserve credit lines for other uses

The math (typical):

For a $55,000 cargo van, 60-month finance at 8.5% APR: - Monthly payment: ~$900 - Total paid: ~$54,000 + $11,000 down = $65,000 - Plus interest: ~$11,000 - Resale at year 5: ~$20,000 (depending on miles) - Net cost over 5 years: ~$56,000

For the same van leased at $750/month, 60-month term: - Monthly: $750 × 60 = $45,000 - Down payment: $2,500 - Net cost: $47,500

In this scenario, leasing is ~$8,500 cheaper over the term. But the buyer has an asset at the end. The lessee returns the truck and starts over.

Tax implications (consult your accountant):

• Buying: Section 179 deduction lets you deduct up to $1M of qualifying equipment in year of purchase (subject to taxable income). Bonus depreciation for equipment over Section 179 limit. Long-term: standard depreciation + interest expense.
• Leasing: lease payments are deductible as ordinary business expense. Simpler tax treatment. No Section 179 (you don't own the truck).

For service businesses with strong cash flow and good profit (i.e. tax liability to offset), Section 179 on a truck purchase often makes buying the strictly better choice. For early-stage businesses with thin margins, lease deductibility is simpler and the cash flow flexibility matters more.

The hybrid approach:

Many operators buy the foreman's primary truck (kept 8+ years, accumulates equity) and lease secondary trucks (rotated every 3-4 years for efficiency + image). This balances long-run cost on the workhorse with fleet refresh on the secondaries.