Leasing or buying: What’s best for your fleet?
Assets can be a boon to your business. Or they can be seen as a costly burden.
Either of these statements may be true when deciding on a key question – Should I lease or buy a fleet vehicle?
The answer is rarely simple. But there are some factors that’ll guide you to a ‘yes’ or ‘no’ when it’s crunch time for a fleet investment. As a general starting point, think about the following pros and cons:
When leasing is the way forward
The primary, obvious benefit of leasing a fleet vehicle is paying less upfront. There’s usually a small fee to kick off a hire contract, as well as the monthly costs that’ll land in your account on each renewal date, but these are far more modest than buying a van, car, truck or motorcycle outright.
You’ll also avoid hidden fees. You can claim back 100% of the tax on you lease, for instance, as long as it’s only used for professional purposes. Small and medium-sized business can foster expansion by leasing what they need, when they need it. This flexibility ensures the vehicle is only used for the specific period - giving value to your venture.
Yet a lease comes with a few caveats – chief of them is the mandate that your drivers look after the vehicles to the best of their ability. Keeping them clean, operative and undamaged can place more stress on fleet managers looking to avoid a charge at the leasing company’s discretion. Additionally, a long-term lease will drain a large share of funds without giving you working capital, filtering money somewhere that can’t lead to a return amount through resale.
The argument for an investment…
On the flipside, then, it’s better to buy the vehicle if a) you can afford it, and b) it’ll be a concrete investment that’ll stay on the road for three or four years. In fact, much of this can depend on how quickly the car/truck/van will depreciate in value. Research the projected depreciation timeline; vehicles that degenerate faster are better for leasing, because they won’t net as much cash for a second-hand sale in the future.
Remember too that buying something puts its overall conditions in your hands, without someone looking over your shoulder. No-one can penalise you for below-excellent conditions when it’s only your responsibility. While it’s always good to educate drivers on maintenance and cleaning, there aren’t as many stringent measures to follow under risk of a fine. You can also tot up as much mileage as you want in a given year.
There is, however, the issue of repairs, servicing and MOTs to consider. These costs can undermine the reliability of your purchase. That’s why we at Allstar have developed a discount ServicePoint system for fleet managers across the UK. Whenever you seek a tyre change, diagnostics, new components or any other mark of care for a vehicle, we’re here to prune the price down to size. We can even help drivers monitor their mileage. Explore our features and our fuel card network for cheaper running fees, or contact us today for more information.