A full-service lease can be pretty tempting when you are looking to build a stable annual fleet operations budget. But is it the best bang for your buck?
Vehicle leasing operators often offer a full-service option that provides 100% of the routine (non-driver-caused) maintenance for your leased vehicle for the duration of the lease. This includes oil changes, tune-ups, part replacements, and inspections if performance falters.
For a small business operating a van or truck fleet - or just one vehicle - the full-service deal provides some distinct appeal and advantages. However, the pricing scale is that of convenience, not listed at cost. This means that in many cases, there is a better alternative to full-service van and truck leases - especially if you are building a fleet of some size.
Adding Up the Cost of Full-Service Leasing
A full-service lease package can add anywhere from $50 to $500 per month to your lease agreement. If there are major repairs done, you are essentially paying for them at a steady, predictable cost over time instead of the typical cost fluctuations of vehicle maintenance.
Expensive replacement parts and even the guarantee of a replacement vehicle if yours becomes non-functional at no fault of the driver can potentially save you money - but only if those major repairs are needed during the duration of your lease.
Repairs at the Designated Location
The lease provider of a full-service van or truck lease will likely require you to bring the vehicle to their favored garage or headquarters for the provided maintenance and repairs. This limits your ability to plan your routes and must include the leased office or shop more often than you may intend. You may also find that available scheduling is less available than you would prefer.
Insuring Your Fleet Instead of Full-Service Leasing
So what is the practical alternative to a full-service lease? Insurance.
Good vehicle and fleet insurance policies include routine maintenance and periodic repairs as part of the coverage. Insurance designed for a business fleet may even offer to cover the cost of a replacement vehicle when one is down in the shop. These are the same benefits - but likely with more options on which garage to use when seeking insurance-covered repairs.
The larger your fleet is, the more affordable and practical it will be to choose self-provided fleet insurance instead of a full-service lease for every vehicle. If you have a fleet that is blended owned and leased vehicles, the right insurance package could cover maintenance for your entire fleet so that full-service leasing is not necessary to cover the needs of the leased vehicles.
Comparing the Costs: Insurance vs Full-Service Lease
The best way to determine which is the better choice for your fleet is to compare the costs. How much would it cost to insure your fleet to cover routine maintenance and emergency repairs? How much, added up, would full-service leases cost for all your leased vehicles?
The lower number rules the day. If full-service leases are less than local insurance costs, this is your best answer for the time being. As soon as that balance tips over with an economy of scale, it's time to switch to self-provided insurance coverage for routine repairs instead.
When is a Full-Service Lease the Right Choice?
Of course, for every product, there is a buyer. Full-service leases are the best option for a small or startup business with a small fleet and an extremely limited budget. If you can't soak the cost of repairs but you can build a stable budget including one or two work trucks or vans with full-service leasing, then let this option help your small business to thrive at a critical moment.
However, if your business and fleet have grown, you will eventually be ready to ensure your own fleet independently with vehicle leases designed with greater economic efficiency.
For more insights on fleet management or to build exactly the right vehicle lease structure for your fleet leasing needs, contact us today.