After managing fleet and equipment purchasing for a mid-sized company for about six years, I've learned one thing for sure: there's no single right answer to whether you should lease or buy. It depends entirely on what you're acquiring and how you plan to use it.
In my role, I handle everything from the company car program (where Volvo XC90s and XC40s are popular options) to the heavy stuff—garbage trucks, skid steers, forklifts. I process roughly 60-80 equipment orders annually, and our fleet spans about 50 vehicles across two depots. I've made the wrong call more than once. What I mean is, I've learned the hard way that what works for a service van doesn't work for an excavator.
Breaking Down the Decision: Three Common Scenarios
Here's how I think about it. You're essentially facing one of three situations:
- Scenario A: Executive & client-facing vehicles. You want the brand, the latest safety tech, and predictable monthly costs. Think Volvo XC90 or XC40.
- Scenario B: Specialized, heavy-use equipment. This is your garbage trucks, skid steers, and high-hour forklifts. Reliability and uptime are everything.
- Scenario C: Intermittent or supporting equipment. A second forklift for the warehouse, or a specific attachment. Use is important, but not constant.
Let's walk through each one.
Scenario A: The Company Car (e.g., Leasing a Volvo XC90 or XC40)
This is the most straightforward case for leasing. For our company, leasing the executive vehicles and our sales team's cars makes solid financial sense. Here's why.
First, the nature of the asset. Cars depreciate fastest in the first three years. Leasing essentially transfers that risk to the bank. If I'm budgeting for a sales director's vehicle, I know exactly what the payment is for 36 months. No surprise repair bills, no worrying about resale value. In 2024, we consolidated all our executive leases to a single corporate fleet partner. It cut our administrative time managing individual payments by about 6 hours a month.
Second, the tax and accounting angle is cleaner. A lease payment is a straight operating expense. It's predictable. I don't have to juggle depreciation schedules or worry about the asset's book value. For a company where cash flow and predictable billing are critical, this matters.
But here's the catch. Leases come with mileage limits and wear-and-tear clauses. One of our guys came back from a road trip with a chipped windshield and a minor interior spill. The end-of-lease fee was painful—around $1,200. So if your drivers are going to push 20,000+ miles a year, or if the car will see rough daily use, buying the Volvo might be cheaper in the long run.
Scenario B: The Heavy Lifter (Garbage Trucks, Skid Steers, Primary Forklifts)
This is where conventional wisdom starts to break down. People think leasing is always cheaper for 'big' items. It's not. For a garbage truck or a primary skid steer that runs 40+ hours a week, I generally prefer to buy.
Let me give you a concrete example. We need to replace a garbage truck next year. A lease on that chassis and body combo might look attractive at, say, $3,800 a month. But I've run the numbers. If we buy it with a loan over 5 years, our payment is approximately $4,500. But after 5 years, the truck is an asset we own. Its useful life is 10-12 years. For the second half of its life, our only cost is maintenance. That's where the TCO—total cost of ownership—wins.
Also, consider the customization. Our garbage trucks have specific packer bodies and lift systems. Leasing a 'standard' truck often means you get the lessor's standard specs. Buying allows us to spec it exactly for our routes. That's a hidden efficiency gain.
My experience is based primarily on mid-range heavy equipment. If you're working in a rental fleet or a very high-turnover environment, leasing might make sense for you. But for ownership fleets, buying the core assets is almost always the right call. I learned this in 2021 when we tried to lease a primary forklift to 'save money.' The lease was restrictive, and when we wanted to modify the forks for a specific job, the lessor said no. We had to buy it out after 2 years. It was a costly lesson.
Scenario C: The Intermittent Asset (Secondary Reach Truck or Forklift)
Now, what about the second reach truck in the warehouse, or a specialized forklift you only need for a seasonal project? This is a perfect fit for a lease.
Here, the logic flips. You don't want a long-term asset tie-up for equipment that will be used intermittently. A 3-year lease on a second reach truck, or a 5-year lease on that specialty forklift, keeps your balance sheet clean. When the lease is up, the equipment is obsolete or no longer needed, and simply hand it back. The monthly lease payment is higher than a loan payment would be in the early years, but you avoid the depreciation hit and the hassle of selling used equipment.
I should add that this works well for supporting equipment like portable generators or specific attachments for the skid steer. We lease a concrete breaker attachment for our skid steer for 3 months out of the year. We don't want to own that thing; it's expensive to store and expensive to maintain.
How to Tell Which Scenario You're In
If you're still debating, ask yourself these three questions:
- How long will you use it?
If it's 3-4 years (like a car or intermittent tool), lease. If it's 7-10+ years (like a truck or primary forklift), buy. - Is it a capital expenditure or an operating expense you care about?
If you absolutely need to keep capex low this quarter, lease. If you're focused on long-term profitability, buy the core assets. - Do you need to customize it?
If yes, buy. Leasing restricts your ability to modify the equipment.
This was all accurate as of late 2024. Market conditions for financing and equipment availability change fast, so I'd recommend verifying current lease rates and residual values with your finance team or a fleet manager. In my experience with over 200 equipment orders, getting the financing structure right is half the battle. Don't just look at the monthly payment—calculate the total cost over the life of the asset. That's the number that really matters.