Pros and Cons of Financing vs. Paying Cash for a Used Semi-Truck in Canada

When boosting your trucking business by increasing the count of trucks in your yard buying a used truck is a good option. There are two options available to buy a used truck, either you can buy it through financing or buy it in cash.

Both options offer their own set of benefits and challenges. When you buy used semi trucks for sale in Alberta don’t get confused and buy it only after a thorough discussion with your team members. 

You can make an informed choice whether to buy it in cash or finance by reading this article. Through this article we will explore the pros and cons of both of these options, helping you determine which option is best for you.

What Does Financing a Used Semi Truck for Sale Alberta Mean?

In simple terms buying trucks for sale Alberta through a financing option means you are raising a loan to deposit the amount with the seller. 

Anyone can raise this loan from an authorized bank or financial institution which needs to be repaid in small installments over time often with added interest.

Pros of Financing a Used Semi-Truck

1. Lower Upfront Costs

The major benefit financing options offer is that you need not pay a large portion of your business capital at once. You only need to pay 10-20% of the actual amount as an initial purchase payment and the rest will be paid through monthly installments.

2. Spread Out Payments Over Time

Opting for buying a used truck on financing allows you to distribute the upfront cost in small premiums that need to be paid over several months or years. 

This option is great for small business owners who are low on cash to pay the full price upfront.

3. Build Your Credit History

When you opt for the financing option to buy a used commercial vehicle you get the option to build your strong credit history. 

Paying each installment on time eventually improves your credit rating. Improved credit score helps businesses to buy vehicles on finance without any issue.

Cons of Financing a Used Semi-Truck

1. Interest Payments

No doubt you can easily spread out the cost with the financing option, but one disadvantage associated with this option is that you will end your financing tenure by paying more.

It happens because with monthly installments you pay a high percentage of interest which significantly impacts the total amount paid for the truck, exceeding the original price.

2. Possible Strain on Cash Flow

It appears to be easy to pay monthly payments but during slower seasons or periods of lower revenue, it becomes difficult to manage cash installments every month.

What Does Buying a Used Semi-Truck on Cash Mean?

When you buy a used semi truck in Alberta through the cash option you need to pay the full payment at once. 

All you need to do is manage the complete amount through your savings, business capital or through other means. Once paid for you will get truck ownership at the same time.

Pros of Buying a Used Semi-Truck

1. No Ongoing Payments

The first advantage that you will get if you decide to buy a used truck outright is that you can focus on your work stress-free, with no worry about managing cash every month to pay installments. It allows you to focus on your important future business deal.

2. Complete Ownership and Flexibility

By paying for the truck at once you get full control over its usage and maintenance. No financial body will restrict you from using the vehicle carefully. Additionally, you get the opportunity to modify, sell or trade the truck whenever you want.

3. No Interest Costs

When you finalize the used truck deal outright you become free to pay hefty interest. This means you only need to pay the original amount of the truck without worrying about any other expenses. 

For a businessman like you, buying cash can be a better option when planning for something in the long run.

Cons of Buying a Used Semi-Truck

1. Large Initial Investment

The biggest downside to buying a used semi-truck is the high upfront cost. It sometimes becomes difficult to manage cash for full payment even if you are buying a used vehicle. 

This option may not be best for new business owners who are always low on capital in the beginning.

2. Limited Option to Select From

When deciding to buy through complete cash payment you may run the business stress-free. However, the cash amount that you have raised from different resources may not be enough to purchase the used semi-truck that fits your business model. 

Opting for a loan can be a great way to expand your budget, allowing you to purchase a truck that better suits your needs.

Final Words: Financing or Buying Used semi trucks for sale in Alberta?

Ending the article, now you may have understood buying a used semi trucks for sale in Alberta through financing or buying in cash is a suitable option for your business. 

You can go for any option that is best according to your financial situation, business model and long-term goals.

See Also: How Used Truck Dealers Provide Cost-Effective Financing Solutions?