How Much Does Propane Tank Lease Cost in 2024? (Pros & Cons)

How Much Does Propane Tank Lease Cost
Leasing or renting a propane tank

Are you curious about the cost of leasing a propane tank? Propane, a versatile and clean-burning fuel, has a wide range of applications in homes and businesses. Whether you use it for heating, grilling, or industrial processes, understanding the expenses associated with propane is crucial for your budgeting and decision-making.

One essential aspect of propane usage is leasing propane tanks. The cost of leasing propane tanks can vary significantly, and it’s influenced by factors that directly affect you. These factors include the tank’s size, your location, the duration of the lease, the reputation of the supplier, and any additional services bundled with the lease agreement.

In this article, we will dive into these factors to provide you with a comprehensive understanding of how much it will cost you to lease a propane tank.

Read on…

What Does It Mean If A Propane Tank Is Leased?

When a propane tank is leased, it means that you do not own the tank; instead, you are renting it from a propane supplier. Leasing a propane tank typically involves a rental agreement with the propane company, which can have several implications:

  1. Ownership and Maintenance:
    • The propane supplier retains ownership of the tank, and as a lessee, you are not responsible for the initial purchase cost.
    • The leasing company usually handles all maintenance, repairs, and inspections, ensuring the tank is safe and compliant with regulations. This can save you the cost and hassle of these tasks.
  2. Rental Fees:
    • Lessees pay a recurring rental fee, which can be monthly or annual, depending on the agreement. These fees can vary based on the size of the tank and the supplier.
    • Some companies may include the rental fee in the cost of propane deliveries, while others may charge it separately.
  3. Usage Agreement:
    • Typically, you are required to purchase propane exclusively from the leasing company. This means you may not be able to shop around for the best propane prices.
    • The lease agreement may have terms and conditions regarding minimum usage or delivery schedules.
  4. Replacement and Upgrades:
    • If the tank needs to be replaced or upgraded, the propane supplier will usually handle this. This can be beneficial as technology and safety standards improve over time.
  5. Contract Terms:
    • Leasing contracts can vary in length. Some may be short-term, while others can be long-term agreements.
    • It’s important to understand the terms of the lease, including any penalties for early termination or requirements for tank relocation.
  6. Flexibility:
    • Leasing can be advantageous if you do not want the upfront cost of purchasing a tank or if you prefer the flexibility of not being tied to a specific tank.
    • It can also be convenient if you move frequently or expect changes in your propane needs.

For example, companies like AmeriGas and Ferrellgas offer tank leasing options where they provide regular maintenance and safety checks, ensuring that the leased tanks meet all safety standards​.

In summary, leasing a propane tank can offer convenience and reduced maintenance responsibilities, but it also involves ongoing rental fees and typically requires you to purchase propane from the leasing company.

How Much Does It Cost To Lease a Tank

To give you a better idea, refer to the table below:

Propane Tank Size Approximate Lease Cost Range (per year)
20 lb (Barbecue) $20 – $50
100 lb (Residential) $50 – $150
120-gallon (Residential) $150 – $250
250-gallon (Residential/Small Commercial) $250 – $400
500-gallon (Commercial/Agricultural) $400 – $800
1000-gallon (Large Commercial/Industrial) $800 – $1,500

It’s important to shop around and compare prices from different companies before leasing a propane tank. This way, you can be sure you’re getting the best deal possible. To get an idea of how much it will cost to lease a propane tank, contact your local propane supplier and ask for a quote.

Additional fees you need to shoulder when renting and installing a propane tank:

  • permits range from – $25-50
  • Installation costs might increase – Thigh might cost around $200-$300
  • piping and fittings – $2-$3 per foot

See table below which size is best your need:

Tank Size Typical Usage Lease Cost Implications
Residential Tanks
120 Gallon Supplemental uses: cooking, hot water, or space heating in smaller homes. Least expensive; may require more frequent refills.
500 Gallon Medium-sized homes using propane for multiple applications. Moderate cost; offers better volume value and fewer refills.
1,000 Gallon Larger homes with high propane usage for multiple appliances or central heating. More expensive but less frequent refills may offer long-term savings.
Commercial Tanks
1,000 – 30,000 Gallon (and above) Large-scale operations: agriculture, commercial buildings, industrial equipment. Costs vary by size; larger tanks may offer bulk purchase discounts.
Specialized Tanks Specific needs: forklift cylinders, vehicle fleets, etc. Unique pricing based on specialized demands of the equipment.

Read related article: Can You Rent A 500 Gallon Propane Tank? (Costs Involved)

Additional Costs Associated with Propane Tank Leasing

When considering the lease of a propane tank, the primary concern is often the upfront lease fee. However, various other expenses might emerge over time. To make an informed financial decision, understanding these costs is crucial. Below we delve into some of the common additional costs associated with propane tank leasing:

Maintenance Fees

1. What They Cover:

Maintenance fees typically encompass:

  • Inspections: Regular inspections are mandatory to ensure the propane tank functions correctly and safely. This process checks for any potential leaks, corrosion, or other issues that might compromise the tank’s efficiency or safety.
  • Routine Service: This includes services like cleaning, repainting, or making minor repairs to ensure the tank’s longevity and safety.
  • Replacement Parts: Over time, certain parts of a propane tank, such as valves or gauges, may require replacement due to wear and tear.

2. How Often They’re Applied:

The frequency of maintenance fees can vary based on:

  • Contractual Agreement: Some lease agreements may include periodic maintenance fees, whether monthly, quarterly, or annually.
  • On-Need Basis: If there’s a specific issue with the tank or if a part needs replacement, a maintenance fee might be charged separately from any periodic fees.

Insurance or Protection Plan Costs

  1. Purpose:
  • Having an insurance or protection plan in place is vital to cover any unexpected damages or issues that arise with the propane tank. Such plans can shield you from incurring heavy costs in case of accidents, natural disasters, or other unforeseen events.

2. Coverage:

Insurance or protection plans may cover:

  • Damage to the Tank: This includes any damages caused by external factors such as natural disasters, accidents, or vandalism.
  • Liability: In case the propane tank causes harm to someone or damages property, liability coverage can protect against legal claims or medical expenses.

Loss of Contents: If there’s a leak or other issue leading to a loss of propane, the plan might cover the cost of the lost fuel.

3. Cost Implications:

The cost of these plans can vary based on:

  • Tank Size: Larger tanks might have higher insurance premiums due to the increased volume of propane they hold and the potential risks associated.
  • Location: If the tank is in a region prone to natural disasters or other risks, insurance costs might be higher.
  • Provider: Different insurance companies or protection plan providers may offer varying rates and coverages.

Read related article: Are You Allowed to Paint Propane Tank If It Is Rental

Factors Influencing Propane Tank Lease Prices

Leasing a propane tank comes with varying costs, influenced by several external dynamics. Here’s a brief overview of factors affecting these prices:

1. Size of the Tank

  • One of the primary determinants of propane tank lease costs is the tank’s size. Just like many other leased products, larger tanks generally come with a higher lease cost.
  • Small Tanks (20lb to 100lb tanks): Often used for grilling and other small applications, their lease prices are relatively low. These are typically the types you might find at a grocery or home improvement store.
  • Medium Tanks (120-gallon to 500-gallon tanks): These are more common for residential heating or small commercial applications. Their lease prices are higher than smaller tanks but remain more affordable than the largest options.
  • Large Tanks (1000-gallon and above): These tanks are typically for large homes, commercial applications, or agricultural uses. They have the highest lease costs due to their size and the amount of propane they can store.

2. Location

  • The geographical location where you intend to lease the tank can significantly influence the cost.
  • Urban vs. Rural: Typically, urban areas might have slightly higher lease costs due to increased demand and logistical challenges. However, in rural areas, the delivery and maintenance of tanks might be less frequent, affecting costs.
  • State Regulations: Some states have stringent regulations surrounding propane tank installation, maintenance, and usage, which can add to the leasing cost due to compliance measures.

3. Duration of Lease

  • The duration for which you’re committing to lease a tank can impact the pricing.
  • Short-term Leases: These might come with a higher monthly or yearly rate due to the flexibility they offer.
  • Long-term Leases: Committing to a longer duration can often fetch you a discount on the lease price, making it more economical over time.

4.Supplier Reputation

  • The reputation and track record of the supplier play a significant role in the lease pricing.
  • Well-established Suppliers: Established players in the market might charge a premium due to their proven track record, quality of service, and extensive infrastructure.
  • Newer Suppliers: They might offer competitive rates to attract customers, but it’s essential to verify their service quality, customer reviews, and adherence to safety standards.

Read related article: Is It better to Lease or Buy a Propane Tank? (See Comparison Table)

How Many Years Can You Lease a Propane Tank?

The length of time you can lease a propane tank varies depending on the supplier and the terms of the lease agreement. Here are some common durations and considerations:

  1. Typical Lease Terms:
    • One-Year Lease: Many propane companies offer one-year leases, which can be renewed annually. This provides flexibility for customers who may need to adjust their propane usage or consider ownership in the future.
    • Multi-Year Leases: Some suppliers offer longer-term leases, such as three-year or five-year agreements. These longer leases may come with benefits like locked-in rates or lower annual fees.
    • Seasonal or Short-Term Leases: For customers who only need propane for a specific season or short period, some companies may offer seasonal leases, which are typically shorter than one year.
  2. Lease Renewal and Termination:
    • Lease agreements often include options for renewal at the end of the term. It’s important to review the renewal terms to understand if the lease will automatically renew or if you need to take action to extend it.
    • Some agreements may allow for early termination, but this can come with penalties or fees. It’s crucial to understand these terms before signing a lease.
  3. Company-Specific Policies:
    • AmeriGas: Offers flexible leasing options with annual renewal. Customers can also opt for longer leases with specific terms negotiated with the supplier.
    • Ferrellgas: Provides both annual and multi-year leases, with terms tailored to the customer’s needs.
    • Suburban Propane: Similar to other providers, they offer various lease durations and may have specific deals or promotions for longer-term leases.
  4. Considerations for Leasing:
    • Cost and Fees: Evaluate the cost of the lease over time, including any maintenance or service fees.
    • Service and Maintenance: Understand who is responsible for maintenance and how service calls are handled.
    • Propane Supply Requirements: Often, leasing agreements require you to purchase propane exclusively from the leasing company, which can impact overall cost and flexibility.

It’s essential to discuss these options with your propane supplier to find the best leasing arrangement for your needs. Always read the lease agreement carefully to understand all terms and conditions before committing to a lease.

When Renting a Propane Tank, Consider These

The first thing you need to do when you’re thinking about renting a propane tank is to figure out how much propane you’ll need. This will depend on a number of factors, including the size of your home, the number of appliances that use propane, and your family’s consumption habits.

Once you know how much propane you’ll need, the next step is to find a reputable provider. You can ask family and friends for recommendations, or search online for customer reviews. Once you’ve found a few providers, compare their prices and services to find the best deal.

Other things to consider are:

When renting a propane tank, there are several important factors to consider to ensure that you get the best deal and service for your needs. Here are key points to keep in mind:

  1. Lease Terms and Duration:
    • Length of Lease: Understand the length of the lease term, whether it is annual, multi-year, or seasonal. Some companies offer flexible terms, allowing you to choose the duration that best fits your needs.
    • Renewal and Termination: Check if the lease automatically renews and understand the process for renewing or terminating the lease. Be aware of any penalties for early termination.
  2. Cost and Fees:
    • Rental Fees: Compare the annual or monthly rental fees. Some companies might offer lower rates for longer lease terms.
    • Maintenance Fees: Clarify if the rental fee includes maintenance and repairs or if additional fees will be charged for these services.
    • Upfront Costs: Inquire about any initial setup or installation fees that may apply when starting the lease.
  3. Supplier Requirements:
    • Propane Purchases: Most lease agreements require you to purchase propane exclusively from the leasing company. Ensure their prices are competitive and that their delivery schedule meets your needs.
    • Minimum Usage: Some leases may have minimum usage requirements. Make sure you can meet these requirements to avoid penalties or additional charges.
  4. Tank Maintenance and Safety:
    • Maintenance Responsibility: Verify who is responsible for regular maintenance, inspections, and any necessary repairs. Ideally, the leasing company should handle these tasks.
    • Safety Standards: Ensure that the tank meets all safety standards and regulations. The leasing company should conduct regular safety inspections.
  5. Service and Support:
    • Customer Service: Choose a supplier known for good customer service. Quick response times and reliable support are crucial, especially if you experience issues with your propane supply.
    • Emergency Services: Confirm whether the supplier offers emergency services and how quickly they can respond to urgent needs.
  6. Location and Accessibility:
    • Delivery Area: Make sure the supplier delivers to your area and that their delivery schedule is convenient for you.
    • Tank Placement: Discuss the best location for the tank on your property to ensure it is accessible for refilling and complies with safety regulations.

Read the Propane Tank Lease Agreement Before You Commit

Be sure to read your propane tank lease agreement carefully before signing. A propane tank lease is a contract between you and the propane company that owns the tank. The agreement will outline the terms of your lease, including the length of the lease, the amount of propane you are allowed to purchase, and the price per gallon.

It is important to read and understand the agreement before signing, as it may contain provisions that you are not comfortable with. If you have any questions about the agreement, be sure to ask the propane company representative for clarification.

Most agreements include a section on who is responsible for maintenance and repairs of the tank. Some leases require the tenant to pay for all repairs, while others state that the landlord is responsible. Be sure you understand who is responsible for what before signing the agreement.

What’s in the lease agreement

When leasing a propane tank, it is important to be aware of the terms and conditions of the agreement. The following is a list of common provisions in a propane tank lease agreement:

• Length of lease: Propane tank leases typically have a term of one to five years.
• Rental price: The price of renting a propane tank will vary depending on the size and type of tank.
• Usage fees: Some propane companies charge a monthly or yearly fee for using their service.
• Delivery charges: If you choose to have your propane delivered, there may be a delivery charge.
• Tank maintenance: The lessor is responsible for maintaining the propane tank in good working condition.

By understanding the terms and conditions of your propane tank lease agreement, you can be sure that you are getting the best possible deal on your propane service.

Renting vs Buying

Renting is Economical

If you’re using a propane-powered appliance like a stove, furnace, or grill, you’ll need a propane tank. You can purchase a propane tank, but unless you plan to use it frequently, it may be more economical to rent one.

Renting a propane tank is simple. Most companies that rent propane tanks will deliver the tank to your home or business and set it up for you. They will also provide a regulator and pressure gauge.

When the tank is empty, simply call the rental company and they will come to pick it up and replace it with a full one. Some rental companies may require that you return the empty tank yourself.

The cost of renting a propane tank will vary depending on the size of the tank and the length of time you need it. Typically, the larger the tank, the more expensive the rental will be. Short-term rentals are usually less expensive than long-term rentals.

Comparing Lease to Ownership

Criteria Ownership Leasing
Initial Investment vs. Recurring Lease Fees High upfront cost; no recurring lease fees thereafter. Minimal or no initial investment; recurring lease fees over time.
Maintenance Responsibilities and Potential Repair Costs Full responsibility for maintenance and repairs; choice of service providers. Maintenance typically covered by the leasing company; possible associated maintenance fees.
Flexibility and Financial Implications Freedom to switch suppliers; challenges in relocating or selling the tank. Flexibility to change tank size; potential penalties for early lease termination or supplier change.

Pros and Cons of Leasing

There are a number of pros and cons to consider when deciding whether or not to rent a propane tank.

On the plus side, renting a propane tank can be a more convenient and cost-effective option than buying one outright. Additionally, renting a tank can give you the flexibility to upgrade to a larger size or switch to a different provider if your needs change.

On the pro side, renting a propane tank can be more convenient than buying one outright. This is especially true if you only need a propane tank for a short period of time.

On the downside, however, you may end up paying more in the long run if you rent a propane tank instead of buying one. Additionally, you may be subject to additional fees or charges if you don’t return the tank in good condition. Finally, you may have difficulty finding a rental provider in your area if you live in a rural area.

If you’re considering whether or not to rent a propane tank, weigh the pros and cons carefully to make the best decision for your needs.

The most common reason why renting isn’t for everyone is the price per gallon of propane may be slightly higher compared to when you own your tank.

You may have to pay a higher rental fee than you would if you bought your own tank outright. Additionally, you may be required to sign a long-term contract with the rental company, which could lock you into using their services for an extended period of time.

Beware of These Fees When You Want to Terminate the Lease Early

Hidden Fees Description Why They Matter
Early Termination Charges Fees applied if you decide to terminate your lease before the end of its agreed-upon term. Can be especially hefty, possibly amounting to the remaining lease fees for the term. Important to know if circumstances change.
Fees for Not Using a Certain Amount of Propane Annually Charges applied if you don’t consume a specified amount of propane each year. If not a heavy propane user, you might end up paying more in penalties than for the actual propane usage.
Administration or Service Charges Charges for paperwork, account management, or other administrative tasks. Though they might seem minor, they can accumulate over time. It’s crucial to clarify these fees upfront.

Questions You Should Ask Before Leasing

Leasing a propane tank is a significant commitment, and it’s crucial to clarify all aspects of the agreement before you make a decision. Here are some vital questions you should ask the propane supplier:

What is the Length of the Lease Agreement, and What Are the Renewal Terms?

Do you know how long the lease lasts, and what happens when it ends? Understanding the duration of the lease and the terms for renewal or termination ensures you are fully aware of the commitment you are making and any potential penalties for early termination.

Are There Any Restrictions on Using Propane from Other Suppliers?

Some lease agreements may stipulate that you can only purchase propane from the leasing supplier. Are you comfortable with this, or do you need the flexibility to source propane elsewhere? Clarify if there are any restrictions and how they might impact your options and pricing.

What Is Covered Under Maintenance, and What Isn’t?

Maintenance is a crucial aspect of propane tank leasing. It’s essential to know what specific maintenance services are included in the lease. Are routine inspections, repairs, or emergency services part of the package, or will they incur additional charges? This understanding is vital for budgeting.

What Are the Costs for Upsizing or Downsizing Tanks?

Your propane needs may change over time. It’s important to know the costs and procedures for upsizing or downsizing your propane tank if your requirements evolve. Having this information ensures that you can adapt your propane setup as needed without facing unexpected expenses.

By asking these questions and thoroughly reviewing the lease agreement, you can make an informed decision regarding propane tank leasing that aligns with your specific needs and preferences.

If You Want to Purchase, Costs Will Depend on the Size of the Tank

When considering the purchase of a propane tank, the cost will largely depend on the size of the tank and whether it is installed above ground or underground. Here’s a breakdown of the costs associated with different sizes and installation methods:

Above-Ground Propane Tanks:

  • 100-gallon tank: Approximately $400 to $700.
  • 250-gallon tank: Around $1,200.
  • 500-gallon tank: Ranges from $1,500 to $2,000.
  • 1,000-gallon tank: Approximately $3,100 to $4,000.

Underground Propane Tanks:

  • 250-gallon tank: Around $1,600.
  • 500-gallon tank: Typically $2,000 to $2,500.
  • 1,000-gallon tank: Generally $4,000 or more.

Installation Costs:

  • Above-ground tanks: Installation costs range from $300 to $3,000, including the tank, labor, and materials like a concrete pad.
  • Underground tanks: Installation costs range from $1,500 to $5,000, including excavation, trenching, and connecting gas lines.

Additional Considerations:

  • Maintenance and Inspections: Annual inspections typically cost between $50 and $75.
  • Filling Costs: Propane costs about $2.50 to $3.00 per gallon. For example, filling a 500-gallon tank could cost around $1,000 to $1,500 depending on the current price of propane.
  • Permits and Fees: Permits for installation can cost between $25 and $50, and some areas may require additional fees for hazardous materials handling.

Leasing a propane tank is an alternative that can reduce upfront costs, with rental fees ranging from $50 to $200 per year, depending on the size of the tank and the supplier. Companies like AmeriGas, Ferrellgas, and Suburban Propane offer leasing options, which often include installation and maintenance.

Choosing between buying and leasing a propane tank depends on your long-term needs and preferences. Buying a tank involves higher initial costs but offers more control over propane suppliers and potential savings over time. Leasing may be more convenient with lower upfront costs and included maintenance but typically locks you into buying propane from the leasing company.

The Costs Vary Depending on the Type of Tank

This cost can vary depending on the size and type of propane tank you have, as well as the company you lease it from. There are a few things to keep in mind when trying to determine the propane tank lease cost for your home. The first is that there are two main types of propane tanks: above-ground and underground. Above-ground tanks are typically less expensive to lease, while underground tanks tend to be more expensive.

The second thing to consider is the size of the propane tank. The larger the tank, the more it will cost to lease. This is because larger tanks require more maintenance and upkeep.

Finally, the company you lease your propane tank from will also affect the cost. Some companies may offer discounts or special rates for leasing multiple tanks. Others may charge a higher rate for their services.

By keeping these factors in mind, you can get a good idea of what the propane tank lease cost will be for your home.

Take note of this when buying propane tank

If you’re considering purchasing a large propane tank for your home, there are a few things you should keep in mind. Below are some pros and cons of owning a propane tank.

A large propane tank can last for years without needing to be refilled. This is convenient if you live in a rural area where propane refill stations are few and far between.

Propane is a versatile fuel source that can be used for heating, cooking, and even drying clothes.

Large propane tanks are usually less expensive than smaller tanks, so you’ll save money in the long run.

A large propane tank can be difficult to transport and install. You’ll need to make sure your home is equipped to handle the weight of the tank and that you have a safe place to store it.

If you don’t use all the propane in your tank, it will go bad and need to be replaced. This can be a waste of money if you don’t plan on using your propane regularly.

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