Over the past few years, debate has gone back and forth about the best way for businesses to manage their fleet purchases. Traditionally, businesses would purchase their vehicles outright however it has become more popular and cost effective to lease vehicles for your business.
Leasing has huge benefits financially, administratively and operationally for businesses, outsourcing the often difficult and time consuming vehicle search and management to experienced, dedicated professionals with the benefit that leasing companies are providing customers with access to affordable vehicle finance.
Buying a vehicle will tie up capital in a depreciating asset rather than investing capital elsewhere in the business that would have a more profound effect. The idea of paying for fleet expenditure in smaller, fixed, regular instalments rather than one large, upfront sum can be more appealing to many business owners. More often than not, leasing companies have access to a huge range of vehicles often at a greater discount than their outright purchasing counterparts.
When it comes to tax, leasing agreements allow businesses to pay VAT on the rental amount, rather than the purchase price and not upfront which would occur when purchasing a vehicle outright. Monthly repayments in a leasing agreement also count as a business expense, resulting in even greater tax efficiency.
Another benefit to leasing, is the removed hassle of servicing and maintenance on your vehicle, which is handled in a variety of ways by the vehicle funder, on top of the fact that if you lease a vehicle for 2 to 3 years, they are normally in their warranty period for the duration of the leasing agreement. Leasing agreements can include maintenance costs so that the task of chasing down vehicles for maintenance and organising on a per vehicle basis can be handed over to a professional organisation that can track your fleet and help handle the whole operation of managing your fleet.
In today's modern world, technology is advancing at a rate businesses don't often keep up with when purchasing their vehicles. When leasing a vehicle, selecting a modern vehicle with all the latest technological advancements that can be upgraded every couple of years is a huge benefit and allows optimal fleet management, rather than buying a van or car and having to take a hit on resale when it becomes outdated. As vehicle sophistication evolves, leasing provides businesses with the perfect way to access the very latest technology without breaking the bank.
Leasing agreements will typically offer flexible end-of-term options, meaning businesses have the option to remain in their vehicle or upgrade to the latest vehicle on a new leasing agreement. With businesses not having to take the residual value risk on vehicles as well as not having to pay large sums of money up-front, companies can put their capital to better use in other areas of the business.