Managing an efficient fleet requires understanding the differences between leasing and owning fleet vehicles, and determining which option is best for your business goals.
Choosing the right option in many cases comes down to a simple financial question: “Would it be more cost effective for my company to own assets or lease them?”
How does this decision affect you up front?
The main aspect of a fleet leasing vs. ownership decision is the cash flow implications, both short-term and long-term. Put simply, in a leasing agreement, a company will incur payments each month until the vehicle is sold or paid off, with no down payment required. In an ownership scenario, a company is required to incur a one-time lump sum payment when the vehicle is purchased, and that capital is tied up until the time of resale.
Fleet vehicle leasing is typically the answer for fleets with 25 or more vehicles to allow the company to conserve capital at the time of the agreement.
Fleet leasing: What to consider
Because less capital is needed up-front to acquire vehicles, companies who choose to lease can free up funds for other investments.
In most states, rental taxes will be applied at each lease payment vs. the total price of the vehicle
Lessor, not purchaser arrange financing
Owning fleet vehicles: What to consider
Ownership is an attractive option for companies with access to excess capital or during times when interest rates are high
Sales tax is applied to total vehicle price at the time of delivery
The purchaser arranges to finance
