To Lease or to Buy for your Fleet?
Let’s face it: there are pros and cons when it comes to both buying and leasing fleet vehicles. But let’s assume you’ve done the research, consulted with logistics experts, and are still unsure which option is right for your business. What should you do? Well, in this brief guide, we will go over the advantages and drawbacks of fleet leasing so that you can decide whether or not this is the best solution for you and your business.
What Is Fleet Vehicle Leasing?
Fleet leasing is a type of business leasing that allows companies to lease a large number of vehicles for a fixed period of time. Fleet leasing is pretty much the same as regular vehicle leasing, except instead of leasing one vehicle, you are leasing many vehicles at the same time under the same contract. Fleet leasing comes with some unique advantages, but there are also a few drawbacks.
What Are the Advantages of Fleet Vehicle Leasing?
There are a number of benefits that come with fleet leasing. Namely, you can save money, access newer vehicles, and save money on fuel and maintenance costs. Let’s examine these benefits now in more detail.
One of the main reasons to lease your fleet of vehicles is cost savings. You can save thousands of dollars by leasing, and it’s easy to see why. First of all, your monthly payment will be lower than if you were to buy the vehicles outright, as well as free from maintenance expenses and gas costs (assuming you’re not paying for these things out-of-pocket).
Access to Newer Vehicles
When you lease your fleet, you don’t have to worry about the depreciation of the vehicles. The leasing company owns them, so they will take care of all repairs and maintenance. This also means that if your fleet has a large number of vehicles with similar mileage and age, you won’t have any extra paperwork to deal with in order to transfer ownership from one person or company to another, which can save you a ton of time and stress when the lease expires.
Savings on Maintenance Costs
One of the biggest benefits of leasing is that you don’t have to worry about unexpected maintenance costs. Leasing companies often include maintenance in the monthly payment, so you won’t have to pay for it later on. This means you can focus on your business and not on car maintenance, which can save you both time and a significant amount of money throughout the lifespan of your lease agreement.
What Are the Disadvantages of Fleet Vehicle Leasing?
There are also some drawbacks associated with fleet leasing. First off, you don’t own the vehicles, you may also have higher insurance premiums, and there may be mileage limitations. Let’s go over these considerations in more detail.
Lack of Ownership
The biggest drawback of leasing your fleet is that you don’t own the vehicles. You are simply leasing them for a specific term, and when that time is up, the vehicles are returned to the dealer. Because you don’t technically own the vehicles, there may also be several restrictions on what you can do with them; for example, most fleet leasing companies will not permit any sort of vehicle customization.
Higher Insurance Premiums
Leasing a vehicle can sometimes result in higher insurance premiums than if you owned it. This is because leased vehicles often have more risk, so the insurance company is less likely to provide coverage for them. However, some companies do offer discounts for leased vehicles, so be sure to do some research before insuring your fleet.
Mileage Limits & Penalties
Mileage limits are used to control the cost of leasing. Mileage limits are set by the manufacturer and can be negotiated, but for a new vehicle, they’re usually between 18,000 miles per year and 30,000 miles per year. If you exceed these mileage limits, there are penalties that apply to your lease payment. Generally, when leasing an entire fleet, you will be able to negotiate higher mileage limits, but be sure to discuss this in advance before signing on the dotted line.
Overall, fleet leasing is a good option that provides a number of great benefits, but there are also some drawbacks to leasing vs. buying your fleet. By considering the points mentioned above, you should be able to make an informed decision about whether or not fleet leasing is the right option for your and your company.