WHY RENT?
Establish Credit:
– Are you a new business owner?
– Do you have limited credit history?
– Too young to be considered by some?
– A bumpy credit history that needs to be reestablished?
You have your own circumstances that don’t allow traditional means of credit. TNT Rents may be able to help. We can rent you a trailer to help you establish a payment history and be one of the building blocks to establishing or reestablishing credit. If you live up to your end of the agreement, pay on time, turn the equipment in when done in like shape as when it left, we want to share our experience with you to other creditors and let them know that you are worthy of credit. We can help you with your circumstances, give us a call and we will see what we can do for you.
Off Balance Sheet:
Rentals are not owned or being sold to those who rent. Therefore the rental is not required to be disclosed on your financial statements as a liability. This will help you when you are applying for other types of loans.
100% Tax Deductible:
Your rental payment is 100% tax deductible. If you purchase a trailer you would take depreciation over a given period of time and you would also have to pay a capital gain when you sold it based upon the depreciation. Uncle Sam wins the day by picking your pocket and taking your hard earned dollars through taxes.
If you were to look at rental versus purchasing you should take this into consideration. Let’s assume that you are in the 35% tax bracket. Let’s also assume for sake of simplicity that your monthly rental payment is $1,000.00, a nice round number for this illustration. Since you rent and your rental payment is 100% tax deductible you can look at the true cost of your rental payment as follows: 35% of $1,000.00 is $350.00. If you are renting the after tax cost of that $1,000.00 rental is actually $650.00. You would not be paying the $350.00 to Uncle Sam because you were able to expense off the $1,000.00 rental payment per month. That would be a $4,200.00 reduction in your tax liability over a 12 month period.
If you owned that same trailer you would have to depreciate it between 7 and 12 years (your CPA would set your depreciation schedule based on your business structure), make monthly payments to the bank and once it is paid off and time to trade it in or sell it to purchase a new one pay 15-20%+ in capital gain taxes. So after taxes you may very well be better off renting versus buying your next trailer.
Disclaimer: I am not a tax expert I am just making a suggested tax strategy that may work best for your operation. Please take my idea and run it past your CPA and get his official advice to you for your circumstances.
Flexibility:
Have you been awarded a new contract and do not have enough trailers in your fleet to handle it? Want to turn in your trailer for a new one every 12 months? Are you a dry van or reefer fleet that wants to try out flat-bedding? Do you want to try out a certain brand or specification before you commit to purchase one?
You have total flexibility. Renting allows you to increase your fleet immediately just by picking up the phone when you win one of those last minute contracts. Also, it can let you try out a specification before you buy. Think you can handle your loads with 48′ flats then find out 53’s would have been better? Renting allows that flexibility. You can try different lengths and specifications of trailers without losing the value of the trailer you purchased and then realize it is the wrong specification for the application.
I have learned the hard way over the years. I have tried buying used trailers, investing the money required to bring them to my expectations appearance wise, safety wise, spent money on tires, brakes and other mechanical and then find out the specifications did not work out for the work I had needed it to do. I have also made the same mistake on the new side. Both types of mistakes cost me money! On the used I lost all of my extra investment because it is hard to get all that you invest into a used trailer back and on the new you automatically lose 25%+ the day it drives off of the lot. I should have considered rental before I invested my capital in projects that I was not 100% sure I knew what the situation required. Please save a few bucks at my expense and consider rental for yourself, I wish I would have!
Another great option with rental is when you want to build a trailer or group of trailers to your specifications but the factories are out 5, 6 or more months in backlog. Rentals give you the flexibility to custom build your trailers and wait for them to come in from the factory while still hauling freight to meet your customers needs.
Try Before You Buy:
TNT Sales represent 10 new trailer lines and we have just about every manufacturers trailer in our rental fleet. Ever wondered how a certain brand of trailer performs under your loads? You could rent one from us to find out before you commit to purchase. Want to park your reefer and try flatbed loads for a while so you can see if you like it or can make more money? Renting gives you that chance without a huge commitment. There are endless scenarios of why you would want to try before you buy so keep this option open before your next trailer purchase.
