Your Fleet: Should You Lease or Buy?

Posted in November 28th, 2018
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As your business begins to grow, you may be looking to expand your working fleet. Whether you are into transport or heavy equipment, having reliable and quality commercial vehicles is the cost of growing a successful business.

When you are establishing or expanding your working fleet, there will be several financing options available to you. Deciding whether to lease or buy your fleet vehicles will depend on the specifics of your business and individual needs. There are advantages to either buying or leasing for business owners to consider.

Your fleet manager will be making most of the decisions regarding the purchase of your vehicles. It falls under their responsibility to determine whether new or used commercial truck financing will be used or if purchasing outright is best for your company. Let’s take a look at the benefits that come with both options.

Buying Your Fleet

No Restrictions

  • When you purchase a vehicle you are not subject to any lease agreement restrictions on mileage or maintenance schedules
  • Your vehicle belongs to you allowing you to use it as you see fit
  • No penalties for mileage overages or damages

Sell / Buy

  • Not subject to contract dates and limitations
  • You have the freedom to buy and sell your vehicles as needed without penalty
  • No need to wait out a lease contract or risk losing money

Taxes

  • When you own a vehicle you become eligible to claim the vehicle depreciation amount as a tax deduction
  • The increase in assets through fleet expansion can raise your business value and qualify you for reinvestment rebates

Equity

  • When your purchased fleet becomes valued at a higher amount than what is owed you will have gained positive equity
  • Equity can then be reinvested back into your company

Leasing Your Fleet

Financing

  • No large initial investment or down payments
  • Save capital for other business reinvestment
  • Smaller monthly payments
  • Improve cash flow
  • Improve your debt-to-equity ratio

Warranty

  • It is in the best interest in the leasing company to ensure that their vehicles stay in great shape and as a result often provide excellent coverage on leased cars
  • When you have a problem with your vehicle you can deal directly with your dealership instead of searching for your own mechanic

Upgrading

  • Average age of vehicles ready for lease upgrade is 5 years
  • Establish clean and reliable brand recognition through an impressive fleet
  • No need to sell a vehicle to finance a new purchase

Paperwork

  • Your administration paperwork is taken care of by your leasing company

Conclusion

The choice to buy or lease is a tough one for fleet managers. It depends on many factors that are individual to every business. There are positives for both options, it just depends on how you want your business to move forward.

Leasing may be a more convenient option for start-up businesses. The lower payments and small initial investment can go a long way to allowing start-ups to get themselves established. For companies that are looking to expand and invest in more capital assets, buying their fleet outright might be the right move.

Do your research and find out everything you can about your different financing options before making a final decision.