A friend of mine is going on holiday in a few days time and asked me if he should rather rent or buy a trailer. His family has out grown their vehicle and needs extra luggage space. Although the article will focus on trailers, there are other luggage carrying alternatives, such as roof boxes, which may be a better alternative, although we won't have space to explore them is this week's blog.

Do A Needs Analysis

When you are in the market for a trailer, or an extra luggage carrier to be more broad, there are a lot of options. The challenge, as with any significant purchase, is getting exactly what you need for precisely what you can afford. But here’s the pro tip, when doing a needs analysis on a trailer, the trick is to think not of the present but of the long term. 

Consider the future. Is the family likely to grow? Will you need more luggage space as the kids grow older? I know that my trailer seems to get fuller every year and that nature my wife abhors a vacuum. If there’s empty space then the kids can take their bicycles, or we can take extra clothing so that we don’t have to waste good beach time doing laundry.

Having considered your space needs, the next thing to consider is how you see a trailer. Do you see acquiring a trailer as a capital venture and expect a return on investment? Or, do you view acquiring a trailer for a short-term purpose and are prepared to look at it as a one-time expense that you’re not worried about recovering?

The Will Be Pro’s & Con’s Both Ways

As with most toss ups, there will be pro’s and cons both ways. There are benefits to renting trailers and there are benefits to buying trailers. Likewise, the same would apply to a roof box, which are available both for rent and outright purchase. 

For both, the wise choice weighs the overall ownership cost against the rental option and then decides what the best investment is. Let’s look at both avenues of renting and purchasing.

Bigger May Be Better

Setting aside the rent vs. buy question for the moment, your first consideration will be what type of trailer you need. In this article we are only talking about luggage trailers, so the choice then comes down to size; will it be a 5-foot, 6-foot or 7-foot? There are a few factors you need to weigh before you can move on to the buy vs. rent choice.

Most people will tell you that it is better to choose a larger trailer then a smaller one. While a larger trailer might cost more to purchase or rent, the cost is not proportional to the size, much in the same way a 2TB hardrive is only 30% more then a 1TB hard-drive. And a larger trailer give’s you space to grow, meaning that it will last you for longer. It would be very short-sighted to buy a 5-foot and in a year or two have to sell it for a 6- or 7-foot.

But Can Your Car Tow It?

But there is a caveat. Larger may be more cost effective and more future-proof, but what can your car tow? For this you will need to consult your owner’s manual or look on the specifications plate of your towbar. There are two considerations to take note of here:

• Load weight: That includes dry or net trailer weight, which is an empty trailer, and gross weight, which is the trailer’s maximum capacity.
• Pulling power: This is how large and powerful a vehicle you need to pull the trailer under all conditions.

 These are the main decisions to get out of the way before weighing the benefits of buying or leasing a trailer. Depending on your trailer type and size, this can be a big investment. You now need to have a realistic assessment of your budget and see how it applies to ownership benefits, or if you might be better off to rent your trailer short-term.

The information below has been adapted from The Trailer Superstore .

Benefits of Owning Trailers

Why buy a trailer? Trailers are an excellent asset when well maintained. That’s irregardless of whether you are a professional earning your livelihood with a trailer as a business tool or whether you only use your trailer once or twice a year when going on vacation.

1. Capital Investment

If you purchase a trailer rather than rent one, you have a capital investment to show for it. In other words, your money goes into a hard asset. You’ve acquired a tangible commodity that’s yours, and you have a valuable possession that you call your own. A bought trailer becomes part of your overall portfolio whether you’ve made it as a business investment or consider it a personal asset.

2. Return on Investment

When you’ve bought and paid for a trailer, you can expect a return on your investment. Unlike a rental arrangement where your money is gone after using the trailer, purchase agreements allow you to gain a return on your investment. That can be from using your trailer as a business venture or tool where it makes you money. There are websites like Kampi.co.za which is like the Airbnb of trailers and caravans, where you can rent out your trailer when you are not using it and make decent money.

3. No Hidden Costs

When you buy and own a trailer, you have no hidden costs. With rental trailers, you’re subject to the fine print in the terms and conditions of your agreement. Many trailer companies charge by time and distance, which is a fair arrangement. But, you have to watch for hidden costs like drop-off and late fees, additional insurance and deductible charges for wear and tear on the trailer. You don’t have these hidden costs when you own your trailer.

4. Availability

An owned trailer is an available trailer. It’s there when and where you need it, rather than having to contact a rental company and source a trailer when necessary. Having your trailer always available is a tremendous convenience. You have little or no downtime spent traveling to a rental agency and picking up a trailer. You also have the convenience of leaving your trailer loaded between uses which saves you more time.

5. Flexibility

By buying a trailer and owning it outright, you have the flexibility to use your trailer as you see fit. You’re not bound by terms and conditions that a rental company fixes. You can loan or sub-let your trailer to another party, which you can’t do with a rental unit. You have the flexibility to convert your trailer into another configuration to serve a purpose you never anticipated. You also have the flexibility with ownership to sell your trailer if the right opportunity arises.

6. Overall Use

How many times you’ll use your trailer is a critical factor in tipping the ownership benefit scale. There’ll be a point where the number of times you use a trailer will make buying one the only sensible and logical option. That number of overall uses will depend on your specific situation. It also takes in the previous benefits and makes the total ownership package your only viable choice.

Benefits of Renting Trailers

Owning a trailer is often the best option for people. With all the attractive ownership advantages, you might wonder why people would ever rent a trailer. There are times when renting a trailer does make sense. You have to take in the pros and cons of buying trailers vs. renting trailers to finally arrive at the right decision. Here are some of the benefits of renting a trailer:

1. Duration of Use

If you only need a trailer for a short duration or a once-off event, then yes, it makes sense to rent it. You have the convenience of getting in and out fast. You don’t have the hassle of arranging for financing, and you don’t have all the licensing, registration and insurance paperwork to fill out. With short-term renting, you also don’t have upkeep responsibilities that you do as an owner.

2. Financial

Renting a trailer is a good idea if you have financing issues. Most financial institutes require a substantial down payment, and that dips into your cash reserves. You might also have a significant existing debt-to-service ratio which makes financing a challenge. You don’t have those problems with rental trailers. But, then again, you have no retained capital asset when renting as you do with owning.

3. Storing

Where you store your trailer when not in use might be a challenge if you own it and have the trailer around permanently. Trailers take up parking room. That could be a premium, depending on your location. If you rent a trailer, you can pick it up and drop it off at the rental company rather than trying to store it where you have little or no room. 

4. Maintenance

Rental companies have the responsibility to maintain their inventory. Reputable rental companies keep their fleet well-maintained because it makes good business sense. Regular maintenance costs money, and you can be sure it’s built into your rental agreement. There’s some peace of mind here. However, you’re paying for it with no guarantee that you won’t have problems on the road. When you own your trailer, you’re in control of maintaining it. 

The True Cost of Trailer Ownership

When you weigh the benefits of owning your trailer compared to renting one, you need to look at the big picture. That’s what the true cost of ownership is. When you add it all up, you get a real sense of value. That way you’re assured you’re making the right decision at your time of purchase or rental.

Total ownership costs take in every expense associated with having your own trailer. That includes your cash outlay, financing costs if you have any, licensing and insurance fees as well as your operating costs like maintenance and repairs. These all add up. It amounts to how much you’re going to be using your trailer and what depreciation you experience.

Depreciation is the calculated decline or decrease in your trailer’s value due to age, wear and tear, market forces and general value calculation. Fortunately for trailer owners, these assets don’t depreciate anywhere near what cars, trucks and other motor-powered implements do. There’s no “Mead & McGouther Guide”  standard in the trailer business. Each trailer gets assessed on its own perceived value within the marketplace.

If you keep your trailer in top shape by caring for it and maintaining it, you’ll experience very little depreciation.