Acquiring a new vehicle usually boils down to whether you should buy it outright or lease it. There are advantages and disadvantages for each option, but leasing may prove to be better the better decision if you have challenges with cash flow and your budget is tight. Below are some of the pros and cons of leasing commercial vehicles that you should be aware of before making your choice.
No Down Payments
Leasing commercial vehicles allows you use the latest vehicles without having to pay the full price for it. You only pay for the time used on the vehicle which greatly reduces costs. You don’t even need to put in a down payment unlike when you are financing a new vehicle to own.
Leasing commercial vehicles also provides predictable monthly payments giving companies a cost-effective solution for their needs without committing a large capital investment.
Since the car you lease is not your own, the costs for repair are usually shouldered by the fleet management company. This removes the headaches of having to do maintenance or repairs on the leased vehicles giving you more time to concentrate on operating your business. This also removes any concern over depreciation of the vehicle unlike purchased vehicles that depreciate the minute you take it out of the dealership.
A leased vehicle also can give the company some tax advantages. You may be eligible for tax deductions based on percentage use of a car for business. To get tax benefits for leasing commercial vehicles, you must be able to prove the car is being driven at least 50% of the time for business purposes. And only the business driving portion of the costs of leasing or buying can be deducted as a business expense.
Fees or Fines
You must return leased cars in the same state that it was lent to you. Any modification that you make on your vehicle will have to be undone and returned to stock once the lease agreement has ended. Also, any damage beyond “normal wear and tear” or if the vehicle is returned in a worse state than when it was leased, you will be charged to cover the cost of repair.
Leasing commercial vehicles can also incur “extra” charges. Sometimes, there are conditions stipulated on lease agreements that limit your usage of the vehicle based on certain parameters. Some contracts may limit the distance the rental can cover for example, so if you go over that number, you will be charged for it.
Higher insurance costs can also be more expensive compared to insurance for an owned vehicle. The fleet management company assumes the risks for leasing commercial vehicles and this will reflect in the higher costs of insurance that you need to pay as part of the rental agreement.
Given all these pros and cons, every person should do their homework in what situation works best for their needs. Leasing commercial vehicles is a fantastic option for small businesses who have limited budgets and is a practical choice for those looking to change vehicles based on changing conditions. Fully understanding the responsibilities involved in leasing should make the experience easy and beneficial for all business owners.
Contact us at 1-877-479-1388 or email Steve Gruber at firstname.lastname@example.org for your car, truck or fleet rental and no-term leasing needs. We have locations in Hamilton, Selkirk & Niagara and service all of Ontario through our partner network. With a fleet of over 1000 vehicles and growing, Thomas Solutions has a wide array of work vehicles for lease or rent, and an expert team that provides fleet vehicle management services for large industrial firms.