At Trucks and Parts, we sell both new and reconditioned garbage trucks. But we are often asked by customers, “when does a reconditioned used truck make sense over a new garbage truck?” Trash Haulers have different needs so let me help you and highlight a case in point. Let’s take a brand-new, 40-yard front loader garbage truck and compare it to a 5-year old-reconditioned front loader. The brand-new front loader truck will cost around $290,000 which includes the Federal Excise Tax (FET) that has to be paid. A 5-year-old reconditioned (not used but reconditioned) truck costs around $185,000. So what factors should you consider in your decision?
- Federal Excise Tax. FET is only paid once on a truck and it is paid when the truck is purchased new (it is never paid on a used truck). The FET cost is 12% of the purchase price on a new truck (in this case, that’s about $31,000 of the cost of the new vehicle).
- Sales Tax. Everyone hates paying sales tax, and of course the sales on a higher priced new truck is going to be more than on a reconditioned truck. Using 7% as a sales tax rate, the tax savings on the reconditioned truck will be about $5,000 in this example
- Insurance. Who doesn’t want to reduce insurance costs? In our example, the reconditioned truck represents an asset value that will typically be reported at approximately 50% less for insurance purposes. Lower asset values mean lower insurance premiums.
- Lead Time. New truck lead times are crazy long right now, pushing 3 to 6 months. If you need the truck now, you can’t afford to wait for the new manufacturer’s lead time to deliver the truck.
- Depreciation. Just like buying a new car, the first year depreciation is always the worst and the biggest depreciation hit is when you drive it off the lot. Studies have shown that year one depreciation is often 15-20% of the purchase cost on a new vehicle and total at least 48% of ownership costs over 5 years. In this example, the depreciation on the new truck would be at least $40,000 in year 1 and $132,000 over 5 years.
Haulers have different needs and there are many individual factors to take into account when considering new versus reconditioned. We focus on offering the best solution, whether that be a new truck or a reconditioned truck – and we can help in either case. But it’s important to know that when you buy a reconditioned truck from us, you are not “buying someone else’s problem”. First, we source the best, low mileage trucks available. Second, all our trucks undergo a 210 point inspection by certified professional mechanics. We examine all critical components (which takes 8 hours to complete). Through this inspection process, along with the reconditioning, and knowing the history of the truck, we carefully screen the trucks to ensure that you are buying the best truck possible.
At Trucks and Parts, our customers always come first. We can satisfy all your garbage truck needs based on a discussion of your unique situation. We have over 200 new, reconditioned and used trucks along with plain old used can/chassis for your projects. If you want to extend the life of your truck, we can even recondition it for you!
If you want to learn more about our capabilities, please contact me at [email protected] to arrange a visit.
Best of luck for a profitable 2017,