I see it far too often. Price Shoppers, Quoters, Hoppers, The customer who is concerned with only one thing. What’s the bottom line price Mr. Sales Guy! Hey, I get it. I’ve owned businesses before. Price is extremely important. Who doesn’t want a good deal? What many buyers don’t immediately understand, is that the cheap truck they just purchased, might turn out to be one of the most expensive transactions in their business.
Here are 5 points to consider when making the first or 100th truck purchase. And yes… these are in order of importance. (In depth articles and/or videos on each point can be found in within the site. This article is only meant to give you an overview)
1..Truck Application – This is the absolute most important factor to keep in mind. Is this the right truck for the job? Ask that question several times over. You thought you got an amazing deal on that Ford F450 only to realize that you should have purchased the Hino 268. Sure the cost difference is $20k, about $350 per month, but now you have to add 2 extra runs per week and labor overtime. Extra expense adds up quick and can cost you major $$$$. Do your homework!
2..Truck Performance – Try to get a good understanding of the power you need for your truck. Ask others in your industry. See what they’re using in their fleets. The last thing you want to do is purchase a truck that’s going to under perform. The flip side of the coin, is wasting money purchasing a truck that has more power then needed, basically, buying too much truck. On the Class 8 truck side, you always see owner operators over compensating for something. They go with a Cummins 550hp engine with the 465 would have worked just fine. With that said, when it’s a difficult decision to make, always lean towards more power. Too much power will never hinder business. Too little power can cost you downtime, service bills, and missed customer deadlines. Just enough power means you’re truly saving money.
3..Service – I don’t mean customer service, although that’s also important. Your truck is a work truck, often traveling 15k – 40k miles annually, carrying massive amounts of weight. You will have break downs. That is unavoidable. Buying the right truck will help to decrease the amount of down time, but will never eliminate it. This means service work. If it’s under warranty then you’re taking it to the dealership. If it’s out of warranty then your options expand a little. Things to keep in mind, how far is the truck traveling? Locally, regionally, interstate? If you’re traveling all over the state or driving cross country, you want to make sure you have service options in the areas where you operate. There are several commercial truck dealerships that have very extensive dealer networks. Make sure to look into that. Also, visit the websites of the truck manufactures. There should be a dealer locator link on each site. This will be a big help.
4..Price – Some may be surprised that this isn’t the number 1 concern. I’m assuming that most of you readers are business owners or fleet managers. You understand cash flow, P&L, and just plain watching over your money. Considering that, initial purchase price of a truck should not be your top priority. If you purchase a cheap truck that under performs, is constantly in the shop getting worked on, or you can’t find a reliable dealership / service center to work with, then what does price really matter. You saved $2,000 up front but all of the down time, service issues and headaches, have cost your business tens of thousands of dollars. Not to mention hurting your relationships with customers. I’m not saying to over pay for a truck. As long as the first three points are met, get the lowest price possible. Look at dealership incentives. Manufacturer incentives. December through February seem to be the best time to purchase a truck. Manufacturers have year end incentives. During January and February, dealerships are making deals to get rid of old inventory. If planning for future truck purchases, be mindful of these bargain months. If that’s not an option, make sure to gather several quotes from different dealers. Yes it’s a headache, but if a sales person knows that you’re shopping around, they will give you a better price.
5..Finance or Lease – The majority of truck buyers will finance but more and more are moving towards lease options. Do you plan on driving the truck until the wheels fall off or trade in every 4 or 5 years to minimize hefty service bills down the road? Financing gives you a set term, interest rate, and monthly payments. At the end of the term, you own the truck. Leasing works a little different. Typical leases are 3 to 4 years but 5 and 6 year leases are commonly available. Typically a lease requires a minimal security deposit and the first month payment up front. At the end of the lease term you have several options depending on the type of lease you agreed to. TRAC Lease, iLease, Open End Lease, and Closed End Lease are the more popular types of leases. At the end of your lease term you can turn in, exchange, or purchase the truck. Often times, leasing gives a buyer options that they wouldn’t have through traditional financing. Be careful though, you will have annual mileage limitations and if you go over, the additional cost per mile can add up quick. Financing or leasing is the equivalent of buying vs. renting. Financing gives you the opportunity to buy your truck. Leasing allows you to rent the truck, only paying for the portion of the truck you use. Because you’re only renting the truck, you will never own it and you’re monthly payments will be significantly lower.