Renting vs Buying a Trailer
When you’re in the market for a new trailer you will quickly find that you are faced with a lot of options. Finding the trailer and options that you are looking for at a price that is affordable can be a challenge. By thinking long term, you can make the decision process a little easier and hopefully save some money in the long run.
By taking a step back and analyzing your situation you can determine if your trailer needs are an expenditure or a long-term investment. Are you acquiring a trailer for a one time use and are prepared to look at it as a one-time expense that you’re not worried about recovering?
Like many decisions, there are pluses and minuses to both renting and buying a trailer. The important thing is that you make an informed and educated decision. The best approach is to weigh the overall cost of ownership versus renting and then decide what option is best for you. Let’s take a look at both renting and purchasing a trailer.
Benefits of Owning a Trailer
Why purchase a trailer? Trailers make an excellent asset. That’s regardless if you’re a professional earning your livelihood with a trailer as a business tool or, you might be a serious hobbyist who pulls a trailer full of recreational toys. Either way, if you plan to use your trailer often, you will want to look into the benefits of buying a trailer.
- Capital Investment
When purchasing a trailer, you will have a capital investment to show for it. You’ve acquired a tangible asset that you own. Owning a trailer gives you the option of improving it to add value or to sell it at any time to recoup your investment, or at least part of it. When you buy a trailer it becomes part of your overall portfolio whether a business investment or a personal asset.
- Return on Investment
When you’ve bought and paid for a trailer, you can expect a return on your investment. Unlike a rental arrangement where your money is gone after using the trailer, purchase agreements allow you to gain a return on your investment. That can be from using your trailer as a business venture or tool where it makes you money. Or, it can be a return in the way of having a valuable commodity to your name that you can use to leverage other options like borrowing collateral.
- No Hidden Costs
When you buy and own a trailer, you have no hidden costs. With rental trailers, you’re subject to the fine print in the terms and conditions of your agreement. Many trailer companies charge by time and distance, which is a fair arrangement. But, you have to watch for hidden costs like drop-off and late fees, additional insurance and deductible charges for wear and tear on the trailer. You don’t have these hidden costs when you own your trailer.
An owned trailer is an available trailer. It’s there when and where you need it, rather than having to contact a rental company and source a trailer when necessary. Having your trailer always available is a tremendous convenience. You have little or no downtime spent traveling to a rental agency and picking up a trailer. You also have the convenience of leaving your trailer loaded between uses which saves you more time.
By buying a trailer and owning it outright, you have the flexibility to use your trailer as you see fit. You’re not bound by terms and conditions that a rental company fixes. You can loan or sub-let your trailer to another party, which you can’t do with a rental unit. You have the flexibility to convert your trailer into another configuration to serve a purpose you never anticipated. You also have the flexibility with ownership to sell your trailer if the right opportunity arises.
If you use your purchased trailer for business, you have some benefits available to you. Whereas a rented trailer is considered a one-time business expense, a purchased trailer is a business asset. You’re allowed tax deductions for depreciation which offset the initial purchase cost. This adds to your return on investment and makes taxability an attractive benefit rather than something to avoid.
- Overall Use
How many times you’ll use your trailer is a critical factor in tipping the ownership benefit scale. There’ll be a point where the number of times you use a trailer will make buying one the only sensible and logical option. That number of overall uses will depend on your specific situation. It also takes in the previous benefits and makes the total ownership package your only viable choice.
Benefits of Renting a Trailer
Owning a trailer is often the best option for people. With all the attractive ownership advantages, you might wonder why people would ever rent a trailer.
There are times when renting a trailer does make sense. You have to take in the pros and cons of buying trailers vs. renting trailers to finally arrive at the right decision. Here are some of the benefits of renting a trailer:
- Duration of Use
If you only need a trailer for a short duration or a one-time event, then yes, it makes sense to rent it. You have the convenience of getting in and out fast. You don’t have the hassle of arranging for financing, and you don’t have all the licensing, registration and insurance paperwork to fill out. With short-term renting, you also don’t have upkeep responsibilities that you do as an owner.
Renting a trailer is a good idea if you have financing issues. Most financial institutes require a substantial down payment, and that dips into your cash reserves. You might also have a significant existing debt-to-service ratio which makes financing a challenge. You don’t have those problems with rental trailers. But, then again, you have no retained capital asset when renting as you do with owning.
- Storing Your Trailer
Where you store your trailer when not in use might be a challenge if you own it and have the trailer around permanently. Trailers take up parking room. That could be a premium, depending on your location. If you rent a trailer, you can pick it up and drop it off at the rental company rather than trying to store it where you have little or no room. However, by renting, you’re sacrificing availability which turns into time spent getting a trailer and sending it back.
- Trailer Maintenance
Rental companies have the responsibility to maintain their inventory. Reputable rental companies keep their fleet well-maintained because it makes good business sense. Regular maintenance costs money, and you can be sure it’s built into your rental agreement. There’s some peace of mind here. However, you’re paying for it with no guarantee that you won’t have problems on the road. When you own your trailer, you’re in control of maintaining it. Now that can give you real peace of mind.
The True Cost of Trailer Ownership
When you weigh the benefits of owning your trailer compared to renting one, you need to look at the big picture. That’s what the true cost of ownership is. When you add it all up, you get a real sense of value. That way you’re assured you’re making the right decision at your time of purchase or rental.
Total ownership costs take in every expense associated with having your own trailer. That includes your cash outlay, financing costs if you have any, licensing and insurance fees as well as your operating costs like maintenance and repairs. These all add up. It amounts to how much you’re going to be using your trailer and what depreciation you experience.
Depreciation is the calculated decline or decrease in your trailer’s value due to age, wear and tear, market forces and general value calculation. Fortunately for trailer owners, these assets don’t depreciate anywhere near what cars, trucks and other motor-powered implements do. There’s no “Blue Book” or “Black Book” standard in the trailer business. Each trailer gets assessed on its own perceived value within the marketplace.
If you keep your trailer in top shape by caring for it and maintaining it, you’ll experience very little depreciation. That’s provided your trailer is a popular model or if you’ve done some interesting and appealing custom work to it. You certainly won’t experience this if you choose the rental opton.
Custom Trailer Options
When renting a trailer you will not have the option to cusomize it. With rental trailers, you’ll have a limited option of trailer types and sizes. You’re not going to be able to modify or customize your trailer the way you’d truly like. You’re only going to get that luxury when you buy your trailer from a dealer that specializes in customization.
The experts at USA Trailer Sales are proud to be a Load Trail dealer and are always here to help you negotiate the many options and possible customizations available when buying a trailer. Please contact us with any questions you may have or stop by one of our six Michigan locations to speak with a local trailer expert today.