Regardless of your actual profession, the main tool for any service business is their vehicle. Sure, an electrician or plumber may have every tool imaginable, but they can't show up to a job site with those tools without proper transportation. Many service companies look into purchasing vehicles for their fleet, but one cost-saving option that often gets overlooked is leasing vehicles.
What is a lease?
Leasing a vehicle is a wonderful alternative to buying, especially for those in the service industry. Simply put, you and the leasing company make an agreement for you to use one of their fleet vehicles over a set amount of time for a set monthly rate. Although similar, leasing is not the same as renting. The major differences being the time frame of use and the cost over time (with leasing being less expensive overall).
Are you planning to invest in fleet vehicles later but need trucks or vans right now? You may be interested in a Walk Away Lease. Everything under the sun is covered in one monthly payment except for gas, insurance, and glass repair. Let someone else take care of coordinating plates and registrations, maintenance, and be ready for mishaps with 24/7 roadside service.
Leasing vs. Buying
There are many advantages to leasing a vehicle for your company rather than buying one. The first thing you will notice upon going over any lease agreement is that the monthly payment is lower when compared to a typical note from purchasing a vehicle.
For business owners and managers, saving money on overhead costs like this means more money can be put back into the business to focus on their growth and bottom line. This free eBook by Wilmar, Inc. shows how leasing vehicles can pay for itself over time.
A downside that many dealerships will tell you is that when you lease a vehicle, you don't get to own it once the term is up. While this may be seen as a downside for a car that is to be for personal use only, it is certainly not a downside for those in the service industry. Using your vehicle for work will certainly cause way more wear and tear than a car that's for personal use.
After a few years of daily work with your vehicle, you may not want to "own" it at the end of the agreement. This is where that "downside" turns into a major "upside".
At the end of your lease agreement, you have the option to simply just pick out a newer and better vehicle, rather than being stuck with the one that has been through years of work. According to Triple-A, new vehicles will lose an average of $15,000 of their value within the first 5 years of leaving the lot.
source: Oklahoma Central Credit Union
When you are leasing a vehicle for business use, you can actually write off part of the lease financing costs on your taxes. On top of that, you can still write off a portion of the vehicle's depreciation on your taxes. If you were to take out a loan to buy the vehicle outright, then similar deductions are not possible.
On top of lease payments, even more tax deductions are possible. With leased service industry vehicles you can still write off the current year's per-mileage rate for every mile driven, you can also write off parking fees, tolls, gas, oil, repairs, insurance payments, and much more.
Service Industry Specifics
Similar to how different industries require different tools and materials, different industries will also have different needs when it comes down to the type of vehicle(s) that will soon be added to their fleet.
Service Companies that benefit from leasing include:
- Security Companies
- HVAC Companies
- & Other Service Companies
A good tip to make sure you get exactly what you need, without overspending, is by doing business with a quality company that has years of experience in dealing specifically with service industries.
Wilmar, Inc. has been serving the industry since 1980. Contact Us today to speak with a specialist about fleet needs specific to your industry. Want to be more hands on? Check out our Build-A-Vehicle Tool!