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.
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.
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 leaseguide.com. 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!