Integrating a vehicle rental strategy into your business operations can deliver several advantages. If done correctly, it can offer cost reduction, flexibility and convenience that can benefit your organization.
Financing a new work truck with a loan may require sizeable monthly payments that take a big chunk of your liquidity. There is an opportunity cost to consider when your capital can no longer be used for other investments that can help grow your business. Leasing vehicles may allow for better management of your cash flow. Loan payments are usually higher than lease payments because you’re paying off the entire purchase price of the vehicle, plus interest and other finance charges, taxes, and fees. And while car or truck ownership is considered an “asset,” it can quickly depreciate by up to 30 per cent during its first year. Take advantage of tax deductions on lease payments when you use your vehicles for your business, although this is subject to limits set out by the Canada Revenue Agency (CRA).
Renting is tax friendly in a sense that you can expense the entire amount of the monthly payment. In addition, renting does not require the deployment of your capital, nor a commitment from a term perspective and all your maintenance costs are covered.
Most leases go for two to four years and the vehicles are usually fully covered by warranties giving you peace of mind. You have the advantage of utilizing the truck’s best years of life. Then once the lease is up, you get to trade in for a newer more technologically advanced model. For example, Ford recently introduced its Pro Trailer Backup Assist technology that makes it easier for both long-time and upstart light duty truck drivers to back up conveniently.
If trailering is a big part of your operations, this will help improve productivity. As car and truck manufactures jockey for more market share by introducing advanced technology, you have the flexibility to switch to newer models once your lease has expired. Another boon to leasing is that you don’t have to deal with the headache of selling or trading in your motor vehicle.
Warranties and Repairs
Repairs can be costly for vehicle owners once the car or truck is no longer under warranty. Often you would have to shoulder the cost of the maintenance, repairs and other wear items like tires. Think about revenue and productivity losses when your vehicle is out of service. Leased vehicles on the other hand, are usually fully covered by a warranty for the duration of the lease so you won’t face major repair bills. Major bills that do come up due to mechanical failure are generally covered by the manufacturer.
Rental units fall under the same premise, when renting, you are not responsible for mechanical failures or even wear items as these costs are born by the vehicle owner (unless of course you have damaged the vehicle due to your operation of it). In addition, on a rented unit, when a vehicle goes down due to a mechanical failure or is simply in need of routine maintenance, the rental provider will generally provide you with a spare vehicle for you to utilize.
Keep in mind that not all rental companies are created equal. You will need to scrutinize the terms pertaining to dents, dings and scratches your fleet might incur. At Thomas Solutions, we understand that minor bumps routinely occur so you do not get penalized for these. We also allow our customers to customize their vehicles such as installation of power tailgates, bed liners or tool boxes depending on your needs. Read more about the Thomas Solutions work truck leasing advantage here.
Do you need work trucks or cars for your business? With a fleet of over 800 vehicles and growing, Thomas Solutions has a wide array of work vehicles for lease or rent. Whether you are in Hamilton, Niagara or anywhere in Southern Ontario for that matter, we would welcome the chance to see if we can help you with your fleet needs. Contact us today.