So what's the difference from paying cash or taking payments for a new truck?

Discussion in 'Trucks and Trailers' started by grandview (2006), Jun 28, 2009.

  1. grandview (2006)

    grandview (2006) LawnSite Gold Member
    Posts: 3,466

    A lot of guys here say they won't take payments on a new truck and will only pay cash. So my question is what is the difference from saving up to pay for one or just make monthly payments?

    Ex. For us not so rich guys. Say a new truck payment is 500.00 a month for 48 months. This gives you a truck right away. Or do you put 500.00 a month away for 48 months to pay cash for it?

    This for a new truck only not used.
     
  2. JDiepstra

    JDiepstra LawnSite Bronze Member
    Posts: 1,511

    Usually when you finance a truck you have to pay interest. So, a $30,000 truck actually costs you $38,000.

    Numbers are just an estimate of course.
     
  3. Petr51488

    Petr51488 LawnSite Silver Member
    from NJ
    Posts: 2,371

    only people who are scared pay with cash. they can't manage their money. Paying by credit not only builds your credit, but it allows you to invest in other equipment. If i paid everything i own with cash, i would not be at the point of my business today. Being that everything is paid off, the new purchases paid for themselves by allowing me to get more work, and work more efficiently. efficiency = money
     
  4. doug1980

    doug1980 LawnSite Senior Member
    Posts: 276

    I think the main thin to consider is those that are just starting out. For instance, me. I have 10 customers and would love to get a trailer, ZTR, new WB and a new work truck. Now if I was to go out and finance all that right NOW I would be in a huge mess. So for me the best option is to slowly add equipment as I can and not finance. But for those that are well established and are making goo money why not finance. Like was said earlier it builds credit. There are pro's and con's with both. If I was rich I would just pay cash to avoid the interest (wasted money) but since I am not rich I financed my 2007 truck $32,000 and my 2007 Jeep $20,000 and my house $45,000. Thank god we have 4 incomes to pay for all my stuff. lol
     
  5. LouisianaLawnboy

    LouisianaLawnboy LawnSite Silver Member
    Posts: 2,199

    Stupid advice. Read a book titled the total money makeover by dave ramsey.
    Posted via Mobile Device
     
  6. Stillwater

    Stillwater LawnSite Platinum Member
    Posts: 4,829


    Yep I see these guys every year but never the next......
     
  7. Stillwater

    Stillwater LawnSite Platinum Member
    Posts: 4,829

    Due to the 1/2 truths I suggest ignoring post 3 and think about this....

    the difference is different for different people, it depends upon the current status of your business. do you have at least 1 year in operating expenses in a emergency fund?, do you have a LLC? if you employ anyone full or part time do you have at minimum 8 months of payroll? do you currently have any existing debt? are you pulling business credit or personal credit? because the credit scoring is totally different between the two. Ask yourself this question what percentage of your 500.00 dollar truck payment is representative of your monthly income? Are you buying it or is the business buying it. The differences are huge. Their is a bottom line hear. If you are making a profit and managing you resources wisely, and you can afford the monthly payment your savings or checking accounts, cd's or other business investments will reflect that right now this very moment by showing decent balances. The hard part is being honest with yourself if you have right now very little saved and current resources are marginal then it is doubtful you can support the 500per month.
     
  8. fool32696

    fool32696 LawnSite Senior Member
    Posts: 991

    well said stillwater
     
  9. Petr51488

    Petr51488 LawnSite Silver Member
    from NJ
    Posts: 2,371

    You're right. I didn't think about the guy whose starting up. At that point YES, pay cash because theres no sense in buying thousands of dollars of brand new trucks and equipment when you don't have the work to back it up. I didnt even think that route. But i'm still sticking to what i said before. Once your business IS established and have a good customer base and know your monthly expenses, credit is the way to go when you want to go larger.
     
  10. Stillwater

    Stillwater LawnSite Platinum Member
    Posts: 4,829

    I agree with that........
     

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