If you are a business owner whose operations depend on reliable vehicles, you may be looking into whether you should rent or buy your own fleet of work trucks. This is not always and easy and straight-forward decision. Here are top reasons leasing business vehicles may be more advantageous instead of outright ownership.
No Upfront Costs
Cost is one of the biggest factors that determine whether buying or leasing business vehicles will be best for your organization. You have to calculate if the price of ownership is what your business needs or just the marginal cost that comes with leasing. Leasing offers a more attractive proposition for small business owners looking to have the latest vehicles without having to pay full price for one because it spreads their capital expenditures over time.
No upfront costs are needed with leasing solutions and removes the necessity to pay for a down payment. The fleet operator can likewise expense the cost of the vehicle monthly rather than carry its liability on its balance sheet. This opens up capital for other necessary expenses in the company.
Leasing’s predictable monthly payments offer a cost-effective solution to fleet management and requires lower upfront capital investment.
Leased assets don’t depreciate compared to new truck purchases which start depreciating soon after acquisition. Also, leasing doesn’t affect the company’s net worth and won’t show up on your balance sheet. Leasing gives companies the convenience of utilizing an asset at lower risk resulting in better marginal cash flow.
When purchasing a car or truck through loans, the payments are based on the value of the vehicle at the purchase price and will remain unchanged throughout the length of the loan. This means that even if the car has depreciated in value after a few years, you are still paying installment terms based on the full price of the car when it was new.
Reduced Maintenance Costs
Maintenance and repair expenses are greatly reduced under a leasing scheme. Some lease agreements like those at Thomas Solutions can include maintenance and come at predictable monthly costs. Most other leases do not include maintenance but often given the vehicles are newer, there is less costly maintenance required. Conversely, owned vehicles will require higher maintenance costs to keep it in optimum condition over time. The longer you own a truck, the higher your maintenance and repair costs will be.
Leased vehicles are usually newer and will require less repairs than older vehicles. This makes leased vehicles more reliable and can consistently help businesses operations without fear of breaking down.
Avoid Down Time
A broken-down vehicle can cost the company time and lost opportunities because of downtime. This is especially true if the business is still small and depend heavily on a few vehicles for logistics or business operations.
Most leasing companies keep their vehicles under preventive maintenance schedules to ensure optimal performance and safety for their clients. At Thomas Solutions we go a step further and if needed will provide spare vehicles to clients providing they are leasing or renting over 10 vehicles at a time.
Car leasing payments can be tax deductible, based on percentage use of a car for business. While only the interest on the car loan is deductible as a business expense. To get tax benefits for leasing business 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.
Do have more questions leasing business vehicles? Contact us at 1-877-479-1388 or email Steve Gruber at firstname.lastname@example.org. We offer solutions 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.