Lease Vs. Purchase

Fleet leasing offers a variety of benefits and advantages for businesses, including maximizing cash flow, simplifying accounting processes and freeing up bank lines of credit. Full-service fleet leasing companies not only serve as a source of funds, but also as an equipment expert, and asset management tool.

Leases (closed-end or open-end) and loans are simply two different methods of automobile financing. One finances the use of a vehicle, and the other finances the purchase of a vehicle.

Fleet Purchase

The purchase of a fleet vehicle pays for the entire cost of a vehicle, regardless of how many miles it’s eventually driven. Buyers typically make a down payment, pay sales taxes in cash (or roll them into a loan), and pay an interest rate determined by the lender. The first payment is made a month after the contract is signed. When leasing, you only pay for a portion of the vehicle’s cost – the portion that is being used over the duration of the lease.

Fleet Lease

Leasing a fleet vehicle includes the option to forego a down payment, paying sales tax only on monthly payments in most states and payment of a money factor similar to the interest rate on a loan. Leases may also include extra fees and possibly a security deposit, items not part of a direct purchase. First payments are made at the time the contract is signed.

The short-term monthly cost of leasing is less than the cost of buying, according to For vehicles with the same price, term and down payment, monthly lease expenses will be 30-60 percent lower than loan payments.

Advantages of Leasing Your Business Vehicles
  • Maintain Capital in your business for an improved balance sheet. Free up credit lines.
  • Reduced cost through manufacturers fleet purchasing programs
  • One vehicle resource for more time to focus on your business
  • Lesser taxes paid on lease over a purchase. In most states you don’t pay sales tax on the entire value of the vehicle.
  • Fewer maintenance problems
  • Eliminates the hassle of selling or trading in your owned vehicle
  • Lower mothly obligation (pay only for the value of the vehicle you use)
  • Fleet and accident management can be part of your leasing program to better control expenses
  • Afford to replace units more frequently for safer and more reliable transportation
  • Increased employee productivity with more reliable transportation
  • Improved accounting through all vehicles on one monthly billing

Still unsure whether to lease or purchase your fleet? Contact us today!