Are you a business owner or manager who needs vehicles for running your company? More and more companies are using commercial fleet leasing.
The trucking industry, which is in the news these days for delivering medical supplies, household goods and even toilet paper, can especially benefit from commercial fleet leasing.
Here are five of the top benefits of commercial fleet leasing, along with the types of commercial leases.
1. No Huge Capital Investment
One of the main reasons for choosing commercial fleet leasing is that you don't have to invest a lot of capital by leasing a fleet of vehicles. All you need is just a small payment for getting off the ground.
Consider what you can save from not having to buy your vans. The money saved could be used for building your business.
2. Saving Money on Administration Expenses
Another perk for commercial fleet leasing is that you can save money on your administration costs. On the other hand, if your company owned their fleet, it would have to pay for various administration expenses.
3. More Time for Focusing on Your Business
Just think about how vehicle title holders have to devote a considerable amount of time dealing with taxes that are due to license renewals, besides other duties.
However, when you lease a fleet, you can hand over these jobs to your leasing provider who does all the paperwork and record keeping. This lets you focus on your business.
4. Significant Tax Benefits
Commercial fleet leasing can give you major tax benefits. What's more, you can deduct the cost of a lease when you have an operating lease. This gives you a big benefit over traditional financing.
5. Predictable Trading Cycle
When you lease a fleet, you'll be able to get a predictable trading cycle. This allows you to match what's in your lease with the right lifespan, regarding your fleet.
Furthermore, you get to upgrade your vans. Another benefit is adding more vehicles to a fleet as your company grows.
Types of Commercial Leases
The three main types of commercial leases include capital leases, operating leases and commercial vehicle line of credit leases.
- Capital leases—Also called "long-term leases for business equipment", capital leases are leases in which the lessee takes a part of the vehicles' ownership. Because of joint ownership, a lessee is able to claim vehicle depreciation, beside the interest costs from payments of their tax forms. But it's still a loan.
- Operating leases—With this type of lease, the lessee doesn't take on vehicle ownership. Instead, a lessee pays for the right to use the vehicle(s). This favors the business. These leases are typically short-term leases.
- Commercial vehicle line of credit—This lease can be ideal for business owners who need a fleet that involves leasing multiple vehicles. Just keep in mind that this type of lease may entail a limited choice in vehicle types.
Open-Ended vs. Closed-Ended Leases
- Most American and Canadian businesses (about 95%) prefer open-ended leases. Unlike a closed-ended lease, an open-ended lease doesn't have limited mileage. Also, there aren't any penalties for terminating a lease early. Moreover, there aren't penalties for excess wear and tear.
- There are some cases in which closed-ended leasing may be the best option, such as when executive vehicles are needed mostly as a perk. In this situation, a set monthly price may be desirable.
- There are advantages for both types of leases. To know which type will best benefit you, contact us.
Other Considerations and Warnings
- Sales from commercial fleets totaled 65,848 in February 2020. This was from nine manufacturers and represented a yearly increase of 8.7 percent
- Make sure your business chooses the right lease.
- A national emergency declaration has been issued by the Federal Motor Carrier Safety Administration. This provides regulatory relief, regarding hours of service, to commercial vehicle drivers who transport emergency relief for the coronavirus crisis.
Does your business need to lease a car, truck or fleet of vehicles? If so, then look no further than Wilmar, Inc.
As the Southeast's largest independent leasing and fleet management company, we've earned a reputation for delivering top-quality service. Contact us to learn more about how we can help you.