Starting a food truck business can be a worthwhile venture if you take the right steps to protect yourself financially. Since it's fairly expensive for most people to buy their own food truck, you should consider the economic benefits of leasing it, which is much cheaper. Here's what you should know about leasing and insuring a food truck.
There are two different methods of leasing a food truck. The traditional way involves paying a fixed monthly amount until the lease expires. The alternative way to lease a truck is to enter a rent-to-own agreement with a dealer that offers such a plan.
Your financial condition will determine if you are in a better position to buy or lease a food truck. If you've got millions in the bank, you might consider buying a food truck, in which a quality vehicle costs between $100,000 and $200,000. If you don't have enough money, you can apply for a loan, but a lease would be the less risky strategy. A food truck lease runs between $2,000 and $3,000 per month.
There are pros and cons to buying and leasing a vehicle of this size and value. From an investment standpoint, you'll need to consider how much the truck depreciates over time, which ideally will be countered by profits. Many new independent food businesses, just like most startups in general, don't survive long due to high costs. Leasing allows you to test the waters, whereas buying is more of a commitment that might not pay off.
While a down payment is required for a lease, it may be within your budget. One of the drawbacks to leasing, however, is you won't be able to customize the vehicle like you can if you own it. Several established food service companies lease food trucks to entrepreneurs, such as Roaming Hunger, The Food Truck Group, and Mobi Munch. The company that leases you the truck will require insurance. If your policy lapses, the lessor will likely cancel the lease.
Also read: What coverages should my food truck insurance policy have?
To be approved for a food truck lease, you'll need a business plan and good credit. You may also need to show income or enough savings to ensure you can afford the monthly payments.
The idea of leasing a food truck makes sense if running a food business is your passion and you have enough money to afford the monthly lease. The beauty of leasing is it allows you to kick-start your business and earn immediate revenue. Make sure you have sufficient financial protection by investing in the right insurance plan. Contact us at Graystone Insurance Group for more information on how to insure commercial vehicles.
