Truck Driver Learning Center

Short-Term vs. Long-Term Truck Lease: What’s Right for Me?

Written by Branden Leedahl | Feb 28, 2022 3:18:54 PM

Are you ready to hop into a truck lease? 

Congratulations!

Taking the next step in your trucking career and deciding to lease your truck is a big move, and an exciting one at that!

Now that you’ve decided becoming an independent contractor is the right choice for you, there are a few more decisions you need to make. 

What kind of truck will you lease? Will you choose newer or older equipment? Who will you lease with? Should you do a short-term lease? Or a long-term lease? 

All the decision-making you have to do can be overwhelming. And if you’ve never leased before, how do you know what the best decision for you is? How do you make the right choice?

I’m a leasing manager and I’m here to help. It’s my job to help drivers understand their leasing options so they can decide which options match their needs, wants and goals.

In this article, you’ll learn: 

  • The pros and cons of short-term leases
  • The pros and cons of long-term leases
  • How to choose the best lease for you

By the time you finish reading this article, you’ll know whether you should do a short-term or a long-term lease and you’ll have another decision crossed off your checklist. 

What Are The Pros and Cons Of Short-Term Semi-Truck Leases?

If you never plan on buying a semi-truck, a short-term lease is a great option. It’s also a great option if you don’t like the commitment of a long-term lease. 

Pro: Keep Switching Trucks

When you decide to pursue a short-term lease, you have the opportunity to switch trucks after your lease is complete. You can lease another truck without any ties to your previous truck. Or, you can simply sign another lease agreement on the same truck.

If you like to be in a new/newer truck regularly, short-term leases might be a great option for you. 

Short-term leases might be beneficial if you’re trying out a new company or a new truck model. A one-year lease is enough time to help you decide if you like the company and that type of truck.

Pro: Lease Completion Bonuses

Many companies offer a lease completion bonus to drivers who complete their short-term lease.

Every company will offer a different amount, but it can be a nice chunk of cash at the end of the leasing period. Some drivers continuously do one- or two-year lease terms to get that completion bonus at the end.

Pro: Little or No Money Down

More often than not, you won’t be required to put down any money on a short-term lease. You may not even have to do a credit check. 

Perhaps you don’t have a lot of savings or you don’t have the best credit. A short-term lease will get you into a truck even if you don’t have a lot of money for a down payment or your credit is less than stellar.

Con: Fewer New Truck Options

Keep in mind that, with the recent truck shortage, you may not always be able to get into a new truck. So if you’re the type of driver that only wants to get into a short-term lease because you want to drive a brand-new truck every year, that might not always happen.

Con: Not Building Equity In Your Truck

When you do a short-term lease, you’re not building equity in the truck. You are essentially paying the leasing company to utilize their truck to turn a profit. 

If you ever decide that you want to purchase that truck after the short-term lease ends, you’ll be facing a higher balloon payment.

What Are The Pros and Cons Of Long-Term Semi-Truck Leases?

Getting into a long-term lease is a good idea if you are considering eventually purchasing a truck. 

Pro: Build Equity in Your Truck

When you sign a long-term lease, you build equity in the truck. 

When you sign a short-term lease, your interest rates are higher. Your payments are primarily going toward paying interest. But when you take out a long-term lease, the payment is actually going toward the truck. Every payment you make goes into the equity of the truck.

For example, if the truck is worth $150,000 and you’ve made $50,000 worth of payments so far, you have $50,000 in equity.

Pro: Purchase Your Truck With a Smaller Buyout

A long-term lease provides the perfect opportunity to purchase the truck. If you don’t have great credit, you may not qualify for a loan to buy a truck, but you’ll probably be able to get into a lease agreement. After you’ve been paying on the truck for a couple of years, you can purchase it.

Because you’re building equity and you’re paying over a longer period of time, your buyout at the end will be much lower than if you did a short-term lease. Long-term lease payments are typically slightly lower than short-term lease payments too. 

When you have a long-term lease payment, your payment will stay the same throughout the duration of the lease. A short-term lease payment can fluctuate because the truck needs to be revalued after each lease. 

When you own the truck, you can take it to any carrier you want. You can even source the open market as a true owner-operator and arrange your own freight.

Pro: Add Additional Features

Sometimes leasing companies and trucking companies will let you add features to your truck if you’re in a long-term lease. For instance, you might be able to get an auxiliary power unit (APU) or a fridge that you otherwise wouldn’t be able to have in a short-term lease.

Con: Requires a Down Payment 

When you sign a long-term lease, you will most likely have to make a down payment. The amount will depend on the year of the truck and its mileage. 

If you don’t have a few thousand dollars set aside, this can be a major con. 

On the other hand, if you’re planning on purchasing the truck one day, this down payment will go toward the overall cost of the truck and will result in a lower balloon payment to purchase the truck.

Con: No Completion Bonuses

When you do a short-term lease, you’ll probably get a completion bonus. When you do a long-term lease, you won’t get a lease completion bonus. 

Con: You’re Stuck in the Same Truck

In a long-term lease, you’re stuck with the same truck. If you like switching out of your truck regularly, you won’t be able to do this in a long-term lease. 

What is the Best Option for You?

Think about your career path when considering the best choice for yourself. Where do you want to be in a few years? 

Do you want to be an owner-operator? Do you want to own your own truck?

Do you still want to be leasing a truck? Or maybe changing careers? 

A short-term lease is a great option for you if you don’t want the commitment of a long-term agreement. If you want to be in a new truck every year or two and you don’t want to be driving the same truck year after year, a short-term lease is your best bet. You’ll also have the added lease completion bonus at the end of each term. 

If you’re considering the idea of becoming an owner-operator one day, but you’re not quite sure if you want to do it, a long-term lease is the perfect segway to get you there. You’ll build equity in the truck with every payment that you make. If you want to buy the truck, the balloon payment will be lower because you have equity in the truck. If you decide you don’t want to buy, you can simply take out a new lease.

Finding the Right Leasing Company with the Options You Need

So, what’ll it be for you? A short-term lease or a long-term lease? 

Carefully consider your long-term trucking goals before you make your final decision. You should also weigh the pros and cons of leasing new vs. old equipment and if that’ll impact your decision. 

Now that you know what kind of lease you want to do, it’s time to find a company to lease with. 

Ultimately, the company you decide to lease with will play a large role in your success as a driver. You need to find a company that you feel good about — an honest, respectful company that has the equipment, freight and pay that you desire. 

We’ve gathered a list of the top companies to lease a semi-truck with to make your decision a little bit easier.