A fleet lease vehicle is a motor vehicle, such as a van or truck, owned and leased by a leasing company. Other organizations lease several vehicles for their fleet business purposes. The agreement is set in a contract for a certain amount of time and the company pays a fixed amount per month.
Should you lease or buy fleet vehicles?
Whether you’re looking at replacing old vehicles in your fleet or expanding your business, the question as to whether to lease or buy your vehicles is always present and there are many factors when deciding which route to follow.
Because every business has different needs, we can’t tell you outright what you should do when facing this sometimes tricky decision. But to make it a little easier, we’ve selected a few articles from around the web that tackle exactly this issue.
Quality Used Vans: Demand Outstrips Supply
According to British Car Auctions, the demand for good quality used vans is currently very high, causing the average value at auction to rise to record levels. Van User magazine takes a look the current trends:
“The market remains very short of good quality stock and with anecdotal evidence suggesting retail activity picked up in September there was very competitive bidding right across the remarketing sector last month.”
– Duncan Ward, General Manager, BCA
Read the full article from Van User here
How to Buy Fleet Cars for Business
Choosing what to buy and when can be difficult. Before purchasing, it’s important to think about the long-term costs and how you will finance the purchase. This interesting article addresses these considerations head on:
“Manufacturer discounts, normally called volume related bonuses or VRBs, are available to organisations that buy large numbers of vehicles – for example, fleet management companies, contract hire companies and other organisations that have big fleets.”
– Startups.co.uk
Read the full article on Startups.co.uk here
Is Van Leasing More Attractive Than Buying?
One of the big advantages of leasing is that you don’t need to worry about depreciation. Add to this the fact that your leasing company is duty bound to provide you with a vehicle for the duration of your contract, and this means that provided you keep up the day-to-day maintenance of your vehicles, you should never have the burden of large repair bills.
“The idea of buying machinery and keeping it with no expense spared may have been the way to operate in bygone years, but remaining lean is definitely appreciated by accountants who want to keep their clients in business.”
– Stuart Matthews, Leasing Options
Read the full article on The Discovery Blog here
Funding: Leasing Benefits Stretch Far Beyond Cost Savings
While there may be obvious cost savings in leasing, there are hidden costs that can be avoided too. These include tax and maintenance costs. This article from Fleet News explores the issues and benefits of leasing:
“Businesses can reclaim 50% of the input VAT on monthly payments, and the whole monthly lease costs immediately become allowable as a deductible expense.”
– Darren Shaw, Director, County Finance Group
Read the full article on Fleet News here
Cutting Back on Car Hire Costs
For employees that are not on the road all the time, it may be worth considering other options as opposed to long term hire contracts. Looking at alternative ways to get your employees to important meetings – and whether or not they need to go at all – can be key in leaner times.
“A more cost-effective approach to employee mobility is just as vital now as it was then and many businesses have grasped how this can help make their domestic business transport policies more efficient.”
– Adrian Bewley, Director of Business Rental, Enterprise Rent-A-Car
Read the full article on the FleetPoint blog here
Your Next Move
As the above articles show, there are many factors involved in choosing which path is right for you. There is much more to consider than just the initial outlay for your vehicle. Other things you should bear in mind when deciding how to furnish your fleet with new vehicles include ongoing maintenance costs, how many miles a second hand vehicle has already done and of course how you will finance this decision.
If you’ve recently taken the decision to hire or lease your fleet vehicles, we’d love to hear your reasons for taking that particular route. Please let us know your thoughts on this in the comments below.
One thought on “What is a fleet lease vehicle? And how does that work?”
Thanks so much for sharing all of that information about leasing and buying a truck fleet. I had no idea that leasing a fleet means that you don’t have to worry about repair costs— that’s pretty nice! With how expensive repairs can be, I can definitely see how leasing would be a cost effective option. Plus, I think it is nice that you don’t have to worry about depreciation!