One of the main concerns of a business owner is the financial health of the company. Increasing revenue and controlling costs are essential in order to maintain adequate cash flow and improve profit margins. There are many decisions that need to be made in order to accomplish these goals, including whether to buy or lease commercial vehicles.
On one hand, it seems logical to buy vehicles since they become assets of the company. On the other hand, there are a myriad of expenses associated with fleet ownership. Leasing vehicles is often a more appealing option for several important reasons.
Lower Initial Costs
For most vehicle purchases a company can expect to pay at least 10% of the sales price of the vehicle for a down payment. Paying cash for a vehicle means coming up with tens of thousands of dollars all at once. This can add up to a substantial amount when several vehicles are needed.
Entering into a commercial vehicle lease agreement generally requires a substantially lower and sometimes even no down payment than buying. That means more capital remains available in the company's coffers so that it can be used for operating expenses and investments that help the business grow.
Fixed Monthly Expenses
In most cases, monthly lease payments are lower than the payment required to purchase the same vehicle via traditional financing methods. This monthly payment amount is only one of the expenses that fleet vehicle ownership carries, however.
You'll also be responsible for insurance, maintenance, repairs, fuel, licenses, taxes, and other incidental expenses that can often vary month to month. Leasing generally includes many, or all, of these additional expenses in the payment and are the responsibility of the leasing company that owns the vehicle. These inclusive leases help companies with their budget planning throughout the lease term.
Potential Tax Benefits
Leased fleet vehicles are not considered assets of the company. That means they are not included on the balance sheet and the monthly lease payment is not considered a debt. It is, however, considered an expense, which can be used to reduce the company's tax liability down the road.
Keep in mind, however, that if any of your fleet vehicles are also used for personal use, you can only deduct the actual business use expenses. Also remember that you have to choose whether to deduct the lease amount or actual expenses such as mileage, but you cannot deduct both.
Greater Selection of Vehicles
Buying company vehicles can be a time-consuming, tedious, task and you have enough to do already. Plus, the selection available at local dealerships is often very limited. You may have to travel to the next town over, across the state, or even to another state to find exactly what you're looking for.
When you lease fleet vehicles through a leasing company, all of that hassle is eliminated and the quality and quantity of the selection is increased. In fact, a good leasing company will help you find the right vehicles for your application and ensure that they're available when and where you need them.
There are two types of commercial fleet lease options to choose from, either an open-ended lease, or a closed-end lease. Open-ended leases can be as short as one year with a month-to-month option at the end. Closed-end leases are usually longer, perhaps 3 to 5 years.
Both have one important advantage, the ability for the company leasing the vehicle to either purchase or upgrade to another vehicle at lease end. Mileage you've put on the vehicles as well as their condition at the end of the lease have an impact on the value, however, in most cases you can upgrade to new vehicles with little extra expense.
Reduced Administrative Responsibilities
When you own your own fleet of vehicles, you're solely responsible for everything from routine maintenance and repairs to regulatory compliance. That's a heavy load for you and your employees to bear and if you get it wrong it can result in unexpected expenses, fines, and even legal trouble.
A fleet management company like Wilmar takes on all of that responsibility for you. You will never have to worry about falling out of compliance, scheduling maintenance, facilitating repairs, or anything related to your fleet vehicles. Instead, you can focus on the tasks that are truly important to you every day so that you can nurture and grow your company.
Improved Company Image
Even if your business is newly formed, you want prospective and current customers to see you in the best possible light. You have gone out of your way to present a clean, professional image in your office, store, or other facility and you expect your employees to present themselves in the same manner.
Your company vehicles must also carry that image forward. One of the great things about leasing company vehicles instead of buying them is that lease vehicles are usually late model vehicles. Everyone who sees them gets an immediate impression that your company is successful from the very beginning.
Fleet Leasing Done Right
At Wilmar, we believe that personalized services are not only important, but they're absolutely essential for a successful business partnership. We also know that our customers rely on us to keep their businesses operating smoothly and productively.
We offer complete fleet vehicle services including fleet analysis, fleet vehicle acquisition, maintenance and repairs, and fleet management. In other words, we do it all for you so you can keep your attention on your business.
If you want to learn more about Wilmar commercial fleet vehicle leasing and its advantages to your company, please contact us. We understand that your business is unique and that your vehicle needs are too and we'll do everything we can to make sure you're satisfied with your choices.
Even if you're just looking for more information about fleet vehicles, we will be happy to answer your questions. And, if you desire, we'll offer some solid, professional advice, backed by years of experience, that you can use to make the right decision for your company now and in the future.