# Considering buying a truck, need opinions.



## jcgd (Oct 30, 2011)

I have a contracting business on the side and my partner and we are looking at options for vehicles and such. We are quickly learning why so many people skirt the rules while we are trying to do everything legally and by the book. Part time work more or less has the same overhead as a full time business so we are finding it difficult to make the business economical. Currently my partner has a truck and we have a trailer for the business. The trailer is very handy but is proving uneconomical due to my partners young age and the cost of commercial insurance on the truck and trailer. I am currently working out of a Honda Fit so I cannot haul a trailer. We've been looking over a few options and I think the easiest solution is to possibly sell the trailer and have us both drive trucks. If we keep the trailer I will have more affordable insurance, or if we sell it I would use my truck commercially and my partner would resume using his for personal only.

I'm not sure whether I would keep the Fit. Both my Fit and my GF's Civic are paid off. I have never owned a truck as I've never had the need and I don't particularly enjoy spending money on vehicles, but I think it's time for a truck. I vowed I wouldn't buy a truck until I required one and it's getting to the point where once a week I wish I had a truck. Working out of a small car is very awkward and limiting. Clients are also sceptical until they see the trailer. I thought they would find it impressive that we try to be economical, but I find most clients question the lack of traditional gas guzzlers. 

I've researched a few options and I think the best bang for my buck is something like a 2011-2012 Ford F150 XLT with the 5.0L or the 3.5L eco boost. If I keep the Honda Fit I'll probably get a bare bones two seater work truck but if I sell the Fit I would like something suited to the occasional road trip and seating for five. I would need a regular box, so an extended cab is as big as I want to go. I'm a tall guy, but historically I've driven the smallest car possible (Honda Fit, VW golf, etc.) and I don't want to buy more more truck than I require, but I would like to enjoy the purchase if I go ahead with it.

This is what I'm currently paying for the Fit:
2009 Honda Fit, 45,000km, Approx. Value: $8000
Monthly payment: $0
Monthly insurance: $95
Gas: $45 per 500km
Maintenance: $650 per year

If I get a 2012 Ford F150, 100,000km, Approx value: $15,000
Payments: $366/month for 4 years
Monthly insurance: $140
Gas: $120 per 500km
Maintenance: $1000 per year


I've estimated the truck costs but I think I'm looking at additional yearly costs of approximately $4000 plus the car payments totalling $4400/yr . If I keep the Fit and get a work truck the cost of the truck would be around $15k. If I sell the Fit and buy the fancier truck it'll still cost me around $15k but I'll have extra insurance to pay, but lower fuel costs as I'd drive the Fit day to day. I think having the Fit and a work truck would cost me about the same as a daily driver truck over a year.

To be honest the only cost that bothers me is the additional fuel costs. 

I have no debt and can easily afford this truck, just looking for any thoughts before I pounce. Maybe I'm better off with an older truck, or brand new? I'm not sure what the best option is for me.

Thoughts?


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## carverman (Nov 8, 2010)

jcgd said:


> I
> I've researched a few options and I think the best bang for my buck is something like a 2011-2012 Ford F150 XLT with the 5.0L or the 3.5L eco boost.
> 
> 
> ...


Keeping two vechicles doesn't make sense. The cost of the insurance, and maitenance for both will probably exceed any fuel cost savings by combining the driving for both vehicles. 

You have wear and tear items on both vehicles, brakes, tires, batteries, and any other parts that may fail from time to time.
Good thing you are thinking Ford..I had a Dodge truck..bought new. Not too bad on maintenance for the first 5 years , (under 80,000 km), but after that the maintenance costs and the labour went way up for each driving year with wear and tear items. At about $113 an hour, the labour costs start to mount up on the repair bills.

I Bought in 1998. Sold it in 2012 after spending $4,000 on it to get it safetied Had to replace all the brake lines (which rotted outand split), front wheel bearings, suspension ball joints and other mechanical items from 80,000 to 105,000 km when I finally sold it to my neighbour..who is still driving it today. 
Kept the truck for 14 years. 

In your case, a 2012 should be good for about 10 years with hopefully less than $1,000 a year maintenance in the first 5 years, but increasing after that, depending on how much driving you will be doing for your business with the trailer.


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## Just a Guy (Mar 27, 2012)

The one benefit to keeping two vehicles is that it would be easier to justify and keep track of tax deductions. You could clearly state and defend that all the truck related expenses are business related and thus tax deductible and the car is not.

The other way, you have to figure out what portion of your vehicle is being used for business purposes and then hope CRA agrees with you later when they audit you...and you will eventually be audited, every small business I know has been at least once.

Truth be told, if you're not making enough money to cover your expenses and making a profit, then you are either not charging enough or shouldn't be in business. There is a reason why 9/10 businesses fail with in few years, despite the fact there is a lot of work out there...


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## carverman (Nov 8, 2010)

Just a Guy said:


> Truth be told, if you're not making enough money to cover your expenses and making a profit, then you are either not charging enough or shouldn't be in business. There is a reason why 9/10 businesses fail with in few years, despite the fact there is a lot of work out there...


Besides the income tax thing for business vs personal...having two vehicles means business insurance on the truck and personal insurance on the other. and business insurance will always cost
more, even if there is a discount on the second vehicle for personal use.

Add to that; truck plates and stickers for the truck $90 if the truck is used for commercial/personal use, emission tests once the truck requires it. Business liability insurance if you are
doing services on customer's property.

Also the payments and extra insurance amounts to $6072 a year, or $500 a month whether the truck is used or not.
If you are thinking about a 5 litre (318 cu inch) V8, in the city with stop and go driving, it will cost you a bit more in gas for 500km of combined city/highway.
The newer F150 are probably a little more fuel efficient than the older models..but a 5.0 L 6 speed automatic fuel economy is 15 city, (MPG) 17 combined, 21 highway and that is
without towing a trailer loaded down with anything. So at 17mpg (27km per 3.8 litres) combined, (3.8 litre to US gal) 500 km /3.8 = 131 litres x $1.30 here in Ontario = $171.00


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## Just a Guy (Mar 27, 2012)

When I started my first company, which I still run today, I told my clients, I may not be the cheapest out there, but I'm going to be around tomorrow for you. It helped, I'm sure, that I was also very good at what I did. I've seen hundreds of companies go out of business who tried to undercut me to gain client share.


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## jcgd (Oct 30, 2011)

Good points. So far I've think we've been doing very well, but as much as I tried to prepare myself there is still a huge learning curve and the things I missed could be what breaks us.

I've read a few books, and one was 'Profit and Margin'. It explains how to calculate what you have to charge to be profitable. If I follow the formula I essentially price myself out of the market because our sales aren't high enough to cover our overhead at acceptable markups. Sure I could mark up 300% but I simply cannot sell that price. I am having no trouble selling at a reasonable markup (based off full time sales, rather than part time), but in our case that doesn't work.

The logical thing to do would be shut it down, because it's technically not profitable. However, we aren't doing this to make a living per se. We have three reasons, to make a little extra money, to learn a new trade, and to gain the experience of running our own business while having the security of full time employment. We are 26 and 22 and we are not at points in our lives that allow us to break off on our own. Neither of us have the savings we require to accept the risk of failure.



Just a Guy said:


> Truth be told, if you're not making enough money to cover your expenses and making a profit, then you are either not charging enough or shouldn't be in business. There is a reason why 9/10 businesses fail with in few years, despite the fact there is a lot of work out there...



Ultimately I am not sure how to run the numbers, because I can look at the situating from a quantitative perspective, but in reality we are not there simply to make a living. We already have a living. So I'm somewhat conflicted because I'm looking at this business thinking technically we aren't making a lot, but at the same time we get a little money out of it as well as enjoy it and it's a fantastic learning experience. 

To cut to the chase, to make this venture work we must essentially subsidize the business and personally supply the vehicles. There simply is not enough sales volume to allow the markup to cover all overhead, insurance, office supplies, tools, rents, fuel, etc., and then two vehicles on top. So do I shut it down, or do I do it for the love of the job? It's one of those things where cash isn't all I'm being paid with. There are skills and experience I simply will not receive if I close the business.


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## Pluto (Sep 12, 2013)

jcgd said:


> There are skills and experience I simply will not receive if I close the business.


I think you answered your own question. I say go for it because you gain experience, you have jobs outside of the business, and the down side is small. Even if you end up packing in the business at a later date, your experience will serve you well in the future.


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## Just a Guy (Mar 27, 2012)

You may need to do some work on cutting costs. I know when I called around, I managed to cut my insurance costs in half. It took a day or two, but it worked.

Next look at your suppliers, ask for a discount.

It's true when you start out that you often have to subsidize, but that should be out of your pay, which you don't need right now...

Of course, you should have a business plan with projected income and expenses. If the two don't soon turn around you'll need to make changes or shut it down.


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## Addy (Mar 12, 2010)

Your situation sounds very similar to my husbands. He is in the Canadian Forces, was an electrician before he joined (sort of, technically before he went Reg Force for those who know the lingo), and found he was doing very little electrical work. He wanted to keep his skills up and make some money at the same time, so he has his (legal) contracting company.

At the time he thought of starting the business, we had a 17 year old van that was due for replacement. We have a travel trailer we wanted to be able to pull, so we did our research and bought a one-year-old F150. Initially we wanted an XLT or a step up, but ended up finding an amazing deal on a Platinum edition so we bought that (I feel spoiled driving it!). My husband was considering using this for his business, maybe getting a tall molded cap on it so he can stand in the back, but after thinking about it more, we decided to buy him a van for the business since it's a lot easier having two vehicles where we live (small town Ontario with no transit system and not at all "walkable" in the sense amenities are few and far between).

So, I drive the Platinum F150 and he drives a GMC 3/4 tonne van. The F150 is ecoboost so it's better on gas than most trucks, but still not nearly as good as most cars. The van is a pig on fuel, but 3/4 tonnes generally are anyway. The van is far better for carrying parts if you are doing any service calls, but if you are thinking of a construction contractor where you will carry lots of wood, drywall, etc then a truck I imagine is best.

If you are considering vehicle for work purposes, I know of an excellent company out of Hamilton Ontario that buys out corporate fleet vehicles (all used as service vehicles), many of which are one to two years old max. Vans, trucks, even ladder trucks and other such vehicles. Excellent value and all vehicles are white (you want white for a company truck if you plan to decal it, plus white is the safest colour out there, so two good reasons to buy white). PM me if you want the company info - I won't post in public for a variety of reasons.


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## Addy (Mar 12, 2010)

I forgot to add, yes, it's a ***** to go legal as far as costs go, but all it takes is one time doing something illegally and goes terribly wrong for you to potentially lose your house, be sued, and lose all you have. Chances are very slim, but it does happen. There are some excellent contractor discussion forums out there (my husband found two for electrical contractors) willing to offer advice, and share their experiences. Highly recommend seeking out some for your trade as the information is invaluable - coming from guys with years, some as many as 40 years experience.

My husband has found that if you do a good job, provide good service, people who know value in good work will hire you. Let the others hire the cheapest guy as you don't want to deal with customers where price is the top, and sometimes the only, consideration for hiring a contractor.


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## Addy (Mar 12, 2010)

jcgd said:


> If I get a 2012 Ford F150, 100,000km, Approx value: $15,000
> Payments: $366/month for 4 years
> Monthly insurance: $140
> Gas: $120 per 500km
> Maintenance: $1000 per year


I think you can do better than this price wise for a basic truck 2012 with less mileage.


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## marina628 (Dec 14, 2010)

I have no clue if this is allowed but I would try renting a van/truck for a few of these weekend jobs and see how much difference it makes to you.If you go ahead with this purchase you are really committed to keeping this going.It is perfectly fine to run a business for a few year at a loss until you get the break you need to turn a profit.Do you plan to eventually quit your day job and run the business full time?


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## jcgd (Oct 30, 2011)

A basic truck would run me under $15k. But I would keep the Fit. If I'm buying a truck for work and personal I'd go with something a little higher end, around $20-26k. 

Talking with my partner today I think we are going to do the best we can with what we have and essentially go as long as we can without committing more money. Overall our current setup is pretty lean but works. We just overlooked a few things, like commercial vehicle insurance. For now I think we will use our trailer for storage and put commercial insurance on our vehicles. My insurance is pretty cheap. His is much higher due to a more valuable vehicle plus his young age. 

At this point we aren't sure of our long term goals. This business is mostly for fun and a backup plan if anything ever happens with our day jobs. Layoffs aren't a huge concern here in Calgary, especially since we tend to excel within our day jobs. Yet it doesn't hurt to have a backup. My goal at this point however is to move up the ranks at my day job. It's fun and exciting and pays very well for the little stress it brings. There is potential to earn more on my own, but not without lots or risk. 

I think I'll take my foot off the gas for a bit and try to stay lean for now. If I figure the costs of our vehicles based on a % split between personal and business our company is doing fine. But, if we start buying vehicles that are dedicated to a business doing $40k a year in sales the profitability disappears darn fast. 

How I love this forum. So many times I've been talked off the edge.


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## Rusty O'Toole (Feb 1, 2012)

Have you considered a minivan instead of a pickup truck? When I was buying selling and renovating houses I had a pickup truck for years, but switched to a minivan and found it cheaper to buy, cheaper to run, more comfortable and all around better. I also had a trailer but only used it a few times a year, as the van would do nearly everything a pickup would do. I would remove the rear seats and cover the floor with a piece of carpet, this made cleanup easy and saved the original carpet. With a good cleaning and the seats put back in, you would never know it had been used to haul paint, building materials, and tools.

Since you already have one pickup in the fleet do you really need another?

In any case I would keep the Fit. You already have it, and I think you would get sick of driving a truck all the time, not to mention gas mileage etc.

Depending how fancy your business is, you may not want a new truck. I know some guys who keep an old truck for years because customers resent an expensive new truck, think they are making too much profit etc.

If you have a fancy clientele and charge a lot of money maybe they expect you to drive a shiny new truck, wear company uniforms etc. I don't know about that.

I like Marina's suggestion of renting a truck. Home Depot offers cheap rentals to customers, although I have not rented from them myself, might be worth looking into.

Wonder if it would save money of the company owned the vehicles, paid insurance and expenses?


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## Addy (Mar 12, 2010)

jcgd said:


> Talking with my partner today I think we are going to do the best we can with what we have and essentially go as long as we can without committing more money. Overall our current setup is pretty lean but works. We just overlooked a few things, like commercial vehicle insurance.


Our commercial insurance policy is cheaper for us than putting personal coverage on our vehicles. I'm surprised if it's a huge increase for you guys for commercial, is it because the other fellow is fairly young? My husband and I are old farts, in our 40's so maybe that's why it's cheaper for us - although I still find it difficult to understand why it would be cheaper since the coverage is higher and deductible is the same.


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## donald (Apr 18, 2011)

Because you are *not* planning to go full out on this business i question if it is worth it to be in the venture,you might be better off either a)working over-time/advancing further in your current job,the one that you say you want to advance in or b)work part time for another contractor getting paid 35 a hr or whatever is the rate(if you want a job away from your primary job)enabling you to just show up in your normal car and not worry about all the ****(tools/supplies ect ect)
You have to budget numbers over a course of a yr and allocate a % towards transportation(truck/trailer ect)this overhead is the cost of doing business imo(it is a tool and a important one)
The problem is generally most business when starting out pay a living wage and all extras go into re-investments into the business(anything that makes it easier and anything that drives growth/write offs ect)the goal is not really to be make a lot on the personal side of the equation as it is the business(1st few yrs)
The money you are profiting with right now is void because a truck is needed over-head(you don't need to buy new)
It's good to take on side work but.....i question it because if you are to luke warm and not willing spend money back into your venture whats the point?maybe you are also not charging enough?(which can take some time esp in the initial stages)harder going ''half way'' because of exactly this


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## carverman (Nov 8, 2010)

Rusty O'Toole said:


> ?
> 
> 
> I like Marina's suggestion of renting a truck. *Home Depot offers cheap rentals to customers,* although I have not rented from them myself, might be worth looking into.


Cheap rentals from H-D? Not any more. 
Not only you you need to show them proof of insurance, but it's $25 for the first 90 mins and then $15 for each 15 minutes after that and you have to fill up the tank again before returning it. 

As an example; renting a Orange Home-Depot pickup from them could run you $259 for an 8 hr day + taxes = $292 to rent it out.... for just one working 8 hr shift.

I have to get 21 pieces of 4 x 8 2 inch foam insulation from H-D next month for my mansard roofing job, and it's cheaper just to pay them to deliver that load at $60 + tax
to anywhere in the city than to rent a van/truck from H-D.


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## Barwelle (Feb 23, 2011)

jcgd said:


> I thought they would find it impressive that we try to be economical, but I find most clients question the lack of traditional gas guzzlers.


I agree with you here... it's so true. Fancy, brand new equipment looks nice to the customer but guess who ultimately pays for it?

Sounds like you've already made up your mind, but incase you get to a point where you reconsider... 

Like Rusty O'Toole, I came here to bring up the idea of a van. There's the Transit Connect, probably smaller yet than a Dodge Caravan but it's bigger than the fit and you see them around more, won't be looked down on as much as a Fit as it's definitely meant to be a commercial vehicle. Quick search on Kijiji found four in Calgary, in the 12000-22000 range, so it's in your price range and they'll be better on gas than a F150. A full size commercial van would be better but more costly to purchase and run. Benefit of a transit connect or a van over a pickup though is that you don't have to worry about stuff in the back getting stolen or rained on. And you can put a bigger decal on the side!

In the end, if the Fit does the job, great. I get teased as a farm kid for driving a Civic, but because my main transportation is cheap (and there are enough trucks already in the family), I can afford or save for other things. Like you say, since it's more of a hobby for now, putting a big investment into it doesn't make a lot of sense.


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## Synergy (Mar 18, 2013)

I'd buy a good truck or a commercial van and install some professional business decals. This will help you build some reputable brand awareness. Add excellent service and watch your business grow! You can write off the purchase of the truck or van (capital cost) and repairs and maintenance (operating cost) under your self-employment income.


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