Rationale for buying new work truck

Questions on how we spend our money and our time - consumer goods and services, home and vehicle, leisure and recreational activities
Post Reply
Topic Author
dmk395
Posts: 144
Joined: Sat Dec 30, 2017 8:13 am

Rationale for buying new work truck

Post by dmk395 »

My crew of landscape workers daily driver is a 15 yr old Ford F250 with 70k miles. The truck looks good, no rot etc. The past two years I've spent close to $6,000 in repairs (tires were 1k). Only one time was a breakdown which interrupted a work day. I've debated buying a new truck. However at 30k minimum pricing, running the math....am I still better off budgeting for 2-3k worth of repairs each year, or just buying new. My payments would ultimately be much higher....
User avatar
whodidntante
Posts: 13116
Joined: Thu Jan 21, 2016 10:11 pm
Location: outside the echo chamber

Re: Rationale for buying new work truck

Post by whodidntante »

A 15 year old truck is likely fully depreciated, or close to it, so maintenance/repairs, insurance, gas are all you have to pay. A new truck will depreciate, and will also sometimes need repairs, and will need maintenance at a similar rate e.g. new tires, brakes, oil changes, etc. Financially, you are probably going to come out ahead by keeping the old truck. Just curious, what did you have to spend 6k on?
tibbitts
Posts: 23728
Joined: Tue Feb 27, 2007 5:50 pm

Re: Rationale for buying new work truck

Post by tibbitts »

dmk395 wrote: Thu Nov 21, 2019 10:26 pm My crew of landscape workers daily driver is a 15 yr old Ford F250 with 70k miles. The truck looks good, no rot etc. The past two years I've spent close to $6,000 in repairs (tires were 1k). Only one time was a breakdown which interrupted a work day. I've debated buying a new truck. However at 30k minimum pricing, running the math....am I still better off budgeting for 2-3k worth of repairs each year, or just buying new. My payments would ultimately be much higher....
70k is not many miles, but maybe it has lots of hours running at idle or some other unusual application. Tires are just a wear item, you can't count them.

What were the other $5k in repairs besides tires? I hope it's not diesel - if so, no need to explain $5k in repairs. Well you might want to explain how the repairs managed to be only $5k.
User avatar
Cubicle
Posts: 1027
Joined: Sun Sep 22, 2019 1:43 am

Re: Rationale for buying new work truck

Post by Cubicle »

I'd say keep the old truck for now. A new truck can have problems as well, & your current doesn't sound terribly un-reliable at all.
$1 saved = >$1 earned. ✓
User avatar
Brianmcg321
Posts: 1875
Joined: Mon Jul 15, 2019 8:23 am

Re: Rationale for buying new work truck

Post by Brianmcg321 »

Maintenance and repairs are not the same. its seems your are confusing them.

I can't imagine what happened that required $6k in repairs on a truck with only 70k miles.

Why would you throw away 30k on a work truck. You might as well just pile up a bunch of money light it on fire.

What about a used truck?
Rules to investing: | 1. Don't lose money. | 2. Don't forget rule number 1.
johne237
Posts: 2
Joined: Mon Jun 12, 2017 5:05 am

Re: Rationale for buying new work truck

Post by johne237 »

Stick with your 15 year old truck, especially for a landscaping business where your trips are typically short and your crews are typically in and out of the truck constantly. As others have indicated purchasing a newer truck will not always negate maintenance and repair costs. Find yourself a good mechanic, do your preventative maintenance and don't look back. Do know many of these trucks go well over 250K miles when properly cared for even in service as a landscaping truck.
User avatar
Nate79
Posts: 9373
Joined: Thu Aug 11, 2016 6:24 pm
Location: Delaware

Re: Rationale for buying new work truck

Post by Nate79 »

Why do you limit the decision to keeping a 15 year old truck vs buying a brand new truck?

Buy a used truck that you can afford to pay with cash.
theplayer11
Posts: 2282
Joined: Tue Jul 22, 2014 8:55 pm

Re: Rationale for buying new work truck

Post by theplayer11 »

Brianmcg321 wrote: Thu Nov 21, 2019 11:51 pm Maintenance and repairs are not the same. its seems your are confusing them.

I can't imagine what happened that required $6k in repairs on a truck with only 70k miles.

Why would you throw away 30k on a work truck. You might as well just pile up a bunch of money light it on fire.

What about a used truck?
really? I can easily see $5k(after tires) in repairs on a heavy duty work truck. Things add up fast.
AZAttorney11
Posts: 895
Joined: Wed Jan 21, 2015 11:12 am

Re: Rationale for buying new work truck

Post by AZAttorney11 »

Brianmcg321 wrote: Thu Nov 21, 2019 11:51 pm Maintenance and repairs are not the same. its seems your are confusing them.

I can't imagine what happened that required $6k in repairs on a truck with only 70k miles.

Why would you throw away 30k on a work truck. You might as well just pile up a bunch of money light it on fire.

What about a used truck?
Well, we're talking about a Ford...
forgeblast
Posts: 586
Joined: Fri Oct 13, 2017 8:45 am
Location: PA
Contact:

Re: Rationale for buying new work truck

Post by forgeblast »

Start putting the monthly payment for a truck in your saving account automatically. That way when you need the truck you can have the $$ for it. I would also check out facebook market place you can find some nice used trucks there.
Vanguard Fan 1367
Posts: 2139
Joined: Wed Feb 08, 2017 2:09 pm

Re: Rationale for buying new work truck

Post by Vanguard Fan 1367 »

If you have a good mechanic then you should be able to do a lot of repairs for the extra money you would spend on the new truck.

I know someone who had a diesel truck and the engine broke and had to be replaced at 70K miles, thankfully a month or so before the 5 year warranty was up. But normally 70K miles is a little soon to get rid of a truck. I got rid of my Suburban at around 150K miles.
John Bogle: "It's amazing how difficult it is for a man to understand something if he's paid a small fortune not to understand it."
User avatar
dm200
Posts: 23214
Joined: Mon Feb 26, 2007 1:21 pm
Location: Washington DC area

Re: Rationale for buying new work truck

Post by dm200 »

It seems to me that an important (perhaps the most important) factor in your situation is the "cost" to you and your business of the current truck being unavailable when it needs maintenance and repair work. Such "costs" (or loss of income) may be larger than the actual out of pocket repair and maintenance costs.

What is the impact (financial and otherwise) of the truck not being available to you? What about employee/worker issues when the truck is not available?

I also wonder (don't now) if a nice-looking and very low mileage truck like that might bring a very good sale price. Have you determine how much you might get for this truck if you sold it? I don't think mere vehicle age is as much an issue for trucks as it is for cars.
lazydavid
Posts: 5156
Joined: Wed Apr 06, 2016 1:37 pm

Re: Rationale for buying new work truck

Post by lazydavid »

dm200 wrote: Fri Nov 22, 2019 11:49 am It seems to me that an important (perhaps the most important) factor in your situation is the "cost" to you and your business of the current truck being unavailable when it needs maintenance and repair work. Such "costs" (or loss of income) may be larger than the actual out of pocket repair and maintenance costs.

What is the impact (financial and otherwise) of the truck not being available to you? What about employee/worker issues when the truck is not available?
I think this is the key bit. And there are several ways to mitigate the risk without spending a boatload of cash on a new truck:

1) Have an active account with a local Penske/Budget/whatever rental agency. That way you can quickly get a truck for a day or three when yours is down, at a nominal cost.
2) Buy an another older truck as backup. This will require some occasional maintenance, but shouldn't be too bad. And the chances of both being down at the same time are pretty low.
smitcat
Posts: 13308
Joined: Mon Nov 07, 2016 9:51 am

Re: Rationale for buying new work truck

Post by smitcat »

dmk395 wrote: Thu Nov 21, 2019 10:26 pm My crew of landscape workers daily driver is a 15 yr old Ford F250 with 70k miles. The truck looks good, no rot etc. The past two years I've spent close to $6,000 in repairs (tires were 1k). Only one time was a breakdown which interrupted a work day. I've debated buying a new truck. However at 30k minimum pricing, running the math....am I still better off budgeting for 2-3k worth of repairs each year, or just buying new. My payments would ultimately be much higher....
A lot of this could depend on how profitable you business is and how much the write-off of new equipment is worth.
Please ask you accountant that does your K1 - you may find that between trade value and write-off a new truck will not cost what you think after taxes are figured in.
The costs of having to rent a truck and downtime are not to be ignored either.
We replace our pickups every 4 years or so with new.
User avatar
dm200
Posts: 23214
Joined: Mon Feb 26, 2007 1:21 pm
Location: Washington DC area

Re: Rationale for buying new work truck

Post by dm200 »

smitcat wrote: Fri Nov 22, 2019 1:23 pm
dmk395 wrote: Thu Nov 21, 2019 10:26 pm My crew of landscape workers daily driver is a 15 yr old Ford F250 with 70k miles. The truck looks good, no rot etc. The past two years I've spent close to $6,000 in repairs (tires were 1k). Only one time was a breakdown which interrupted a work day. I've debated buying a new truck. However at 30k minimum pricing, running the math....am I still better off budgeting for 2-3k worth of repairs each year, or just buying new. My payments would ultimately be much higher....
A lot of this could depend on how profitable you business is and how much the write-off of new equipment is worth.
Please ask you accountant that does your K1 - you may find that between trade value and write-off a new truck will not cost what you think after taxes are figured in.
The costs of having to rent a truck and downtime are not to be ignored either.
We replace our pickups every 4 years or so with new.
How many miles do these trucks have after four years??
smitcat
Posts: 13308
Joined: Mon Nov 07, 2016 9:51 am

Re: Rationale for buying new work truck

Post by smitcat »

dm200 wrote: Fri Nov 22, 2019 1:28 pm
smitcat wrote: Fri Nov 22, 2019 1:23 pm
dmk395 wrote: Thu Nov 21, 2019 10:26 pm My crew of landscape workers daily driver is a 15 yr old Ford F250 with 70k miles. The truck looks good, no rot etc. The past two years I've spent close to $6,000 in repairs (tires were 1k). Only one time was a breakdown which interrupted a work day. I've debated buying a new truck. However at 30k minimum pricing, running the math....am I still better off budgeting for 2-3k worth of repairs each year, or just buying new. My payments would ultimately be much higher....
A lot of this could depend on how profitable you business is and how much the write-off of new equipment is worth.
Please ask you accountant that does your K1 - you may find that between trade value and write-off a new truck will not cost what you think after taxes are figured in.
The costs of having to rent a truck and downtime are not to be ignored either.
We replace our pickups every 4 years or so with new.
How many miles do these trucks have after four years??
Various - the last one was at 42K.
User avatar
dm200
Posts: 23214
Joined: Mon Feb 26, 2007 1:21 pm
Location: Washington DC area

Re: Rationale for buying new work truck

Post by dm200 »

Various - the last one was at 42K.
This seems like modest to low mileage for four year old models. What is the major factor in your getting new trucks after four years?

I believe the whole financial analysis of new vs used and mileage/depreciation for trucks is much different than for cars. So many trucks, as well, today are purchased and driven almost like a passenger car - and not for business/commercial use. My son, for example, against my advice, chose to pay over $30,000 for a used (two years old, I think) Chevrolet Silverado with either AWD or 4WD (or both). It is a very nice vehicle - and can seat six - three in the front and three in the back - but I doubt he will ever have that many passengers. It has some nice "bells and whistles" - but noting I would pay extra for. He has nearly no practical need for a truck - and mainly uses it as a commuting vehicle to and from work. At least he did not pay more for the full extended cab (with the full sized back doors), but the slightly shorter cab - with smaller back doors - and still the full back seat. He says that he really enjoys driving this truck. Compared with a very basic, but fully adequate car, he is spending a lot for this "enjoyment" - high monthly loan payment, more for insurance and more for Virginia personal property tax. When he complains about not being able to save money for a house down payment, I remind him of this more expensive choice he made.
lazydavid
Posts: 5156
Joined: Wed Apr 06, 2016 1:37 pm

Re: Rationale for buying new work truck

Post by lazydavid »

smitcat wrote: Fri Nov 22, 2019 1:23 pm A lot of this could depend on how profitable you business is and how much the write-off of new equipment is worth.
Please ask you accountant that does your K1 - you may find that between trade value and write-off a new truck will not cost what you think after taxes are figured in.
Good point. Section 179 for 2019 allows 100% bonus depreciation on vehicles with a GVWR over 6,000 lbs that are used 100% for business. So in effect, if you buy a new truck in the next 5 weeks, you can write off the entire purchase price in the current year. That may change the calculus dramatically.
smitcat
Posts: 13308
Joined: Mon Nov 07, 2016 9:51 am

Re: Rationale for buying new work truck

Post by smitcat »

dm200 wrote: Fri Nov 22, 2019 2:22 pm
Various - the last one was at 42K.
This seems like modest to low mileage for four year old models. What is the major factor in your getting new trucks after four years?

I believe the whole financial analysis of new vs used and mileage/depreciation for trucks is much different than for cars. So many trucks, as well, today are purchased and driven almost like a passenger car - and not for business/commercial use. My son, for example, against my advice, chose to pay over $30,000 for a used (two years old, I think) Chevrolet Silverado with either AWD or 4WD (or both). It is a very nice vehicle - and can seat six - three in the front and three in the back - but I doubt he will ever have that many passengers. It has some nice "bells and whistles" - but noting I would pay extra for. He has nearly no practical need for a truck - and mainly uses it as a commuting vehicle to and from work. At least he did not pay more for the full extended cab (with the full sized back doors), but the slightly shorter cab - with smaller back doors - and still the full back seat. He says that he really enjoys driving this truck. Compared with a very basic, but fully adequate car, he is spending a lot for this "enjoyment" - high monthly loan payment, more for insurance and more for Virginia personal property tax. When he complains about not being able to save money for a house down payment, I remind him of this more expensive choice he made.

"This seems like modest to low mileage for four year old models. What is the major factor in your getting new trucks after four years?"
Sometimes 3 years even - never do anything but oil changes, always 100% under warrantee, get the latest safety features, and it does not cost much at all.

"When he complains about not being able to save money for a house down payment, I remind him of this more expensive choice he made.
He does not have his own business.
He did not pay cash.
And I think he selected the wrong trim level to play this game for resale.
Buy them new at higher trims at $10K off MSRP or more and write them off in a profitable business - your numbers change a whole lot.
smitcat
Posts: 13308
Joined: Mon Nov 07, 2016 9:51 am

Re: Rationale for buying new work truck

Post by smitcat »

lazydavid wrote: Fri Nov 22, 2019 2:30 pm
smitcat wrote: Fri Nov 22, 2019 1:23 pm A lot of this could depend on how profitable you business is and how much the write-off of new equipment is worth.
Please ask you accountant that does your K1 - you may find that between trade value and write-off a new truck will not cost what you think after taxes are figured in.
Good point. Section 179 for 2019 allows 100% bonus depreciation on vehicles with a GVWR over 6,000 lbs that are used 100% for business. So in effect, if you buy a new truck in the next 5 weeks, you can write off the entire purchase price in the current year. That may change the calculus dramatically.
"Good point. Section 179 for 2019 allows 100% bonus depreciation on vehicles with a GVWR over 6,000 lbs that are used 100% for business"
Yes - exactly, it was even better than that in 2011- 2013. Buy it right under a profitable business and the numbers work very well.
lazydavid
Posts: 5156
Joined: Wed Apr 06, 2016 1:37 pm

Re: Rationale for buying new work truck

Post by lazydavid »

smitcat wrote: Fri Nov 22, 2019 6:50 pm "Good point. Section 179 for 2019 allows 100% bonus depreciation on vehicles with a GVWR over 6,000 lbs that are used 100% for business"
Yes - exactly, it was even better than that in 2011- 2013. Buy it right under a profitable business and the numbers work very well.
I don't think it was better than 100% in 2011. :D That would be like stealing. A quick Google search suggests it was 100% with a $500k limit, whereas right now it's 100% with a $1M limit.
smitcat
Posts: 13308
Joined: Mon Nov 07, 2016 9:51 am

Re: Rationale for buying new work truck

Post by smitcat »

lazydavid wrote: Fri Nov 22, 2019 6:57 pm
smitcat wrote: Fri Nov 22, 2019 6:50 pm "Good point. Section 179 for 2019 allows 100% bonus depreciation on vehicles with a GVWR over 6,000 lbs that are used 100% for business"
Yes - exactly, it was even better than that in 2011- 2013. Buy it right under a profitable business and the numbers work very well.
I don't think it was better than 100% in 2011. :D That would be like stealing. A quick Google search suggests it was 100% with a $500k limit, whereas right now it's 100% with a $1M limit.
Accelerate depreciation in that time frame for small business's.
Dilbydog
Posts: 161
Joined: Mon May 23, 2016 10:17 pm

Re: Rationale for buying new work truck

Post by Dilbydog »

Is the F250 a diesel with the 6.0L?
Topic Author
dmk395
Posts: 144
Joined: Sat Dec 30, 2017 8:13 am

Re: Rationale for buying new work truck

Post by dmk395 »

Dilbydog wrote: Fri Nov 22, 2019 9:31 pm Is the F250 a diesel with the 6.0L?
gas
Topic Author
dmk395
Posts: 144
Joined: Sat Dec 30, 2017 8:13 am

Re: Rationale for buying new work truck

Post by dmk395 »

dm200 wrote: Fri Nov 22, 2019 1:28 pm
smitcat wrote: Fri Nov 22, 2019 1:23 pm
dmk395 wrote: Thu Nov 21, 2019 10:26 pm My crew of landscape workers daily driver is a 15 yr old Ford F250 with 70k miles. The truck looks good, no rot etc. The past two years I've spent close to $6,000 in repairs (tires were 1k). Only one time was a breakdown which interrupted a work day. I've debated buying a new truck. However at 30k minimum pricing, running the math....am I still better off budgeting for 2-3k worth of repairs each year, or just buying new. My payments would ultimately be much higher....
A lot of this could depend on how profitable you business is and how much the write-off of new equipment is worth.
Please ask you accountant that does your K1 - you may find that between trade value and write-off a new truck will not cost what you think after taxes are figured in.
The costs of having to rent a truck and downtime are not to be ignored either.
We replace our pickups every 4 years or so with new.
How many miles do these trucks have after four years??
Downtime is a killer. We have 3 trucks. 2 are used daily with a spare in most cases. Busy parts of the season all 3 are used. I'm notorious for taking care of equipment and running them much past what most would because of good maintenance, but the devils advocate is always, at what point is new really worth it.....
lazydavid
Posts: 5156
Joined: Wed Apr 06, 2016 1:37 pm

Re: Rationale for buying new work truck

Post by lazydavid »

smitcat wrote: Fri Nov 22, 2019 6:59 pm
lazydavid wrote: Fri Nov 22, 2019 6:57 pm
smitcat wrote: Fri Nov 22, 2019 6:50 pm "Good point. Section 179 for 2019 allows 100% bonus depreciation on vehicles with a GVWR over 6,000 lbs that are used 100% for business"
Yes - exactly, it was even better than that in 2011- 2013. Buy it right under a profitable business and the numbers work very well.
I don't think it was better than 100% in 2011. :D That would be like stealing. A quick Google search suggests it was 100% with a $500k limit, whereas right now it's 100% with a $1M limit.
Accelerate depreciation in that time frame for small business's.
I'm confused. If you buy a truck for say $65k, and can immediately write off all $65k--which is how Section 179 works right now, and back then--what more acceleration can be done? You've fully depreciated the asset as soon as you bought it. It's not like you can then deduct it again over the next couple years.
smitcat
Posts: 13308
Joined: Mon Nov 07, 2016 9:51 am

Re: Rationale for buying new work truck

Post by smitcat »

lazydavid wrote: Sat Nov 23, 2019 6:31 am
smitcat wrote: Fri Nov 22, 2019 6:59 pm
lazydavid wrote: Fri Nov 22, 2019 6:57 pm
smitcat wrote: Fri Nov 22, 2019 6:50 pm "Good point. Section 179 for 2019 allows 100% bonus depreciation on vehicles with a GVWR over 6,000 lbs that are used 100% for business"
Yes - exactly, it was even better than that in 2011- 2013. Buy it right under a profitable business and the numbers work very well.
I don't think it was better than 100% in 2011. :D That would be like stealing. A quick Google search suggests it was 100% with a $500k limit, whereas right now it's 100% with a $1M limit.
Accelerate depreciation in that time frame for small business's.
I'm confused. If you buy a truck for say $65k, and can immediately write off all $65k--which is how Section 179 works right now, and back then--what more acceleration can be done? You've fully depreciated the asset as soon as you bought it. It's not like you can then deduct it again over the next couple years.
Hello David -
I am not exactly sure which year(s) it was as I am not the accountant in this equation. Perhaps it was a couple of years earlier than the 2011- 2013 that I thought as I do not keep my taxes handy for more than a few years. There were a number of tax 'rules' that were utilized in that earlier timeframe for small business's to 'invigorate' the economy (Obama). During that time a small business could write off more than 100% of the costs of capital equip including trucks over #6500 in certain situations (I believe it was 140%). That was possible if you met a number of guidelines one of which I believe was starting a 'new' business during that timeframe. If you are going to attempt to look these up historically there were many other tax breaks for that timeframe one of which greatly affected the taxes which would be owed upon the sale of that same business had it been started within these timeframes.
Since we have worked with an accountant each year we find there are changes which affect our abilities to write off a number of things - we gladly pay our accountant to plan for future years as well as file for current taxes.
andypanda
Posts: 2012
Joined: Sun Nov 12, 2017 8:11 pm
Location: Richmond, Virginia

Re: Rationale for buying new work truck

Post by andypanda »

"I can't imagine what happened that required $6k in repairs on a truck with only 70k miles."

I did a year of landscape work and 2 years of tree service work back when I was a teenager and we - the hired help - drove those F650 trucks hard. They were regularly overloaded and driven almost like we stole them. Heck, one day the guy I was riding with picked up a full overload of sopping wet topsoil and it caused all four rear tires to blow out on the DC beltway. I thought somebody was shooting at us in the seconds before the rims started sparking on the pavement. That was a long day sitting in 90 degree weather waiting for somebody who could safely lift an overloaded truck and also had 4 tires, etc.

Another day we were following an F650 out of the shop yard and when we got up to 55 they suddenly discovered the hood wasn't latched when it blew up and shattered the entire windshield.

They're work trucks and they're used by tired, underpaid people. And this was a major, well run outfit with a dozen trucks and a garden center.

You don't make any money while the truck is broken down.
Post Reply