While over 50% of US businesses lease their fleet vehicles, many companies still choose to buy. Often the benefits of leasing are not well known, which inclines companies to purchase vehicles. But the fact is, leasing is a strategic tool you can use to improve cash flow—and when partnered with a fleet management program—can reduce your acquisition and operational costs while increasing your fleet’s resale value.
In this blog, we will break down the cost and time-saving benefits of leasing for businesses of all sizes.
Leasing vs Buying Fleet Vehicles for Your Company
Many businesses buy fleet vehicles simply because they are more familiar with the process, and the transition to a leasing program can seem overwhelming and unnecessary. There is also a perceived sense of greater control with vehicle ownership, and some businesses prefer to avoid the monthly payments associated with leasing.
But there are several downsides to buying. When you pay for a vehicle upfront, you use capital that could be better spent elsewhere within your company. If you choose to finance a fleet of vehicles, it can reduce borrowing capability and potentially tie up credit lines that could be otherwise used for other business activities.
On the other hand, leasing helps you manage your cash flow better and provides several other benefits.
Top 5 Benefits of Fleet Leasing
1. Gain Greater Control Over Your Costs
When buying vehicles, the acquisition cost is the main focus. Maintenance and fuel costs are seen as separate expenses, making it difficult to calculate your true costs on an ongoing basis.
With leasing, the vehicle cost is translated into a monthly expense and with a fully managed fleet program you will be able to see exactly how much you are spending on total cost of ownership, including your leasing, maintenance, and fuel costs.
This provides an incentive for companies to take a good look at their costs and identify areas when they may be overspending, resulting in better control of overall operating costs.
2. Operate A Newer Fleet
Leasing vehicles allows you to run a newer fleet for the same cost as an older one. New vehicles run more smoothly, need fewer repairs, and are more fuel-efficient.
Supply chain constraints have impacted parts availability, and vehicle repairs are taking longer than usual. Downed vehicles interrupt business operations and cost you money. Newer vehicles are less likely to suffer major breakdowns that require specialty parts. They reduce maintenance and fuel expenses while improving image, reliability, and safety.
New vehicles also contribute professionalism and polish to your company’s image. This is especially important for salespeople and service providers.
3. Enjoy Greater Flexibility
Business needs can change. Commercial leasing provides the ability to add or remove vehicles as needed with flexible terms. Generally, leases are structured for 3-5 years, but terms can be as low as one year, depending on the business's need.
4. Receive Significant Tax Benefits
While tax laws have changed, there are still tax advantages for most businesses that lease vehicles. Lease payments are generally tax-deductible as they are considered business expenses.
5. Benefit From Ongoing Support and Service
Managed fleet leasing programs that provide vehicle research, acquisition, life cycle management, and vehicle disposal. The support offered by a fleet management company for commercial leases will ultimately save you time and money so you can focus on other aspects of your business.
Leasing Vehicles Through a Fleet Management Company
Here at Ewald, we offer flexible lease structuring to fit your business needs. We can set you up with leases with flexible terms, so you can adjust your fleet as your business evolves.
Large national companies provide fixed depreciation rates; even if some vehicles are driven less the structure will remain the same. We offer flexible depreciation rates so you can take advantage of the higher market value of lower mileage vehicles.
We are with you every step of the way, helping you acquire the right vehicles for your fleet and determining when to cycle them out while your maintenance and depreciation costs are still low.
Final Thoughts
It's important to look beyond the upfront costs of acquiring vehicles. When deciding whether to lease or buy, you should consider your total cost of ownership and how much visibility you'll have into your ongoing vehicle expenses.
Working with a fleet management company can help you transition to a fleet leasing program seamlessly without an interruption in service.
