Business Vehicle Leasing – Why Leasing is the Best Choice for Your Business
When you send work crews out on a job do they moan and groan about the vehicles you’ve provided or are they excited by the newer model they get to drive? Are some of your vehicles costing you more than they’re worth because they spend more time in the repair shop than on the job-generating revenue for your business?
Stop Running Your Fleet into the Ground
When you send work crews out on a job do they moan and groan about the vehicles you’ve provided or are they excited by the newer model they get to drive? Are some of your vehicles costing you more than they’re worth because they spend more time in the repair shop than on the job-generating revenue for your business? Are you tired of seeing the competition in new vehicles while you’re driving around in a truck that’s been on the road for ten years with a faded sign on the side?
Can You See Where We’re Going…?
Take advantage of open-end leasing and provide the right vehicles to your workforce. It doesn’t matter if you drive over 40,000 miles a year or if you know your vehicles will take some abuse in the ordinary course of business (ex. Construction). You can have newer vehicles that offer your team updated safety features and spend less on maintenance and repairs keeping more money in your business. The old saying “time is money” is true and a vehicle that’s stuck in the repair shop is costing you money.
What is Open-End Leasing?
We are all familiar with closed-end leasing, which is what most consumers are offered as a retail lease. Closed-end leasing has built-in mileage limits and puts all the damage costs on you as the lessee at the end of the lease with penalties for excess wear and tear. This type of program won’t work well for company vehicles, which means you need a solution that works for your fleet.
With open-end leasing, you pay for what you use. On the front end of an open-end lease, annual miles driven during the lease term and the amount of damage incurred are estimated. This information is used to determine the value of the vehicle at the end of the lease. The monthly payment is calculated based on use. If the estimate is too low resulting in a lower monthly payment, you’ll owe money at the end of the lease but will have more money in your accounts on a monthly basis. If you overestimate the damage and mileage, you’ll build up equity that will result in a surplus at the end of the lease. Some companies deliberately pay more each month to build equity during the lease and use the equity as a down payment towards a new vehicle at the end of the lease.
Can a Leased Vehicle be Upfitted?
Upfitting a fleet of vehicles with the tools and equipment crews need help them be more productive and happier during the workday. Upfitting costs can be built into the monthly payments. With retail leasing you pay for upfitting as a separate cost up front.
Why is Open-End Leasing More Advantageous for Your Business?
Open-end leases give you flexibility and lower monthly payments when comparing to outright financing a vehicle. This allows you to turn vehicles more often. Think of a fleet as rolling billboards that are seen in public; what do you want that image to be? Newer vehicles portray key images and impressions about your business. Better impressions to the public and potential clients often equate to greater profits. These newer models offer the current technology you want and make it easy for your employees to enjoy the ride every day.
Leasing Offers You Financial Benefits
Not only will you have the ability to control the monthly payment, but you can gain fleet rebates leasing a larger number of vehicles and have some impressive income and sales tax benefits. This lease program allows you to lower monthly payments while driving newer vehicles.
What Happens at the End of the Lease
At the end of the lease term you have three options from which to choose. These three options are:
- Buy the vehicles
- Extend the leases
- Trade in the vehicles toward a new leased vehicle
Fleet Management Companies (FMCs) specialize in business leasing and provide a turnkey experience for you. They acquire your vehicles, upfit the vehicles, provide the financing, and sell the vehicles at the end of the lease. They have access to all makes and models of vehicles that are matched to fit your specific need. FMCs offer fleet maintenance programs and fuel programs which can save you up to 40% of your current repair and maintenance expenses. FMCs apply the Total Cost of Ownership (TCO) methodology that saves you money in the long run and allows you to have newer vehicles in your fleet.
Don’t accept the mindset that you can’t afford a newer fleet. Contact an FMC who can help you implement a fleet program under the TCO methodology.