As the vehicles are not owned by the business they will not be counted as an asset. This could be seen as an advantage or a disadvantage. Leasing and buying a fleet are suited to different businesses. The final decision is up to you and what is, ultimately, right for your business.
However, we would recommend you talk to a vehicle broker who has experience in fleet leasing and buying, they will be able to look at your requirements and help you to make an informed decision depending on your business. You may be wondering whether it is a good idea to allow your employees to use their company vehicle for personal use or to keep the vehicles on site overnight and at weekends.
We have already mentioned that there are some advantages to allowing your employees to use their fleet vehicles for personal journeys. Everyone likes a new car, and your employees will be thrilled at the thought of getting a new model every few years. It will make them happier and will help you retain the best employees. If your employees can drive their cars to and from work, as well as to off-site meetings, then they will no longer be reliant on public transport.
There are also some disadvantages to giving your employees permission to use their vehicles for personal journeys. This is the main disadvantage if you allow your employees to use your fleet vehicles for personal journeys, including the commute to and from the workplace. As an employer you have duty of care for your employees. This means ensuring that the vehicle is legal and fit for purpose. You are also responsible for making sure your employees are fit to drive, are not doing too many miles or spending too long on the road.
As you can see, there are some incredible benefits to leasing a fleet for your business. These are also the reasons why fleet leasing is so popular with businesses and continues to grow as more businesses become aware of the benefits involved. Whether you lease or buy your fleet is down to you, but there are some huge benefits to businesses that are hard to ignore. You can also allow your employees to use their vehicles for personal use, something that studies show raises morale and helps retain the best employees.
At OSV, we work with many businesses who are leasing a fleet. We have an experienced team who manage fleets of various sizes on behalf of business clients and know everything you need to know about fleet leasing. If you have any questions, get in touch. Need advice from an experienced Vehicle Specialist on what vehicle is right for you?
This site uses Akismet to reduce spam. In fact, it's a difficult decision that requires additional information. However, many companies choose the fleet lease option. Reasons they cite are that fleet vehicles are generally well-maintained, the leasing company manages maintenance and repairs, and fleet leasing is less expensive than buying. A fleet lease is an agreement between a company and the owner of the fleet. The company pays to use the fleet of vehicles for a set period of time.
It's actually quite similar to renting a passenger vehicle as a private citizen. The biggest difference is that fleet leases generally last for a year or more, involve 2 or more vehicles, and the vehicles include passenger cars, cargo vans, light duty trucks, and even semi trucks. Business owners and their managers are keen to keep costs low and profits high.
This is one of the main advantages of leasing a fleet versus buying vehicles. The initial costs are significantly lower, and maintenance, repairs, and fleet management may be included. The lessee enjoys all of the benefits of the fleet vehicles without incurring additional costs or liability, making it easier to invest in and grow their business.
There are two basic forms of fleet leasing available to companies. Typically, lease agreements last for a minimum of 12 months and can remain in effect for three or more years.
While individual leasing companies may have specific programs, there are two common options for leasing vehicles:. These types of fleet leases are generally for companies with a short-term need for vehicles.
In most cases, the initial lease ends after one year and may continue on a month-to-month basis after that point. The advantage is that there is that the company gets the vehicles it needs with no long-term commitment, however, there are some downsides.
Open-end leases won't necessarily include vehicle repairs and maintenance, especially after the initial year has passed. They also usually include a terminal rental adjustment clause TRAC which holds the company leasing the vehicle responsible for ensuring its defined resale value. If the actual resale value is less than the defined value, the lessee is required to pay the difference. Oftentimes, owning an in-house fleet is part of a company's long range growth plans.
Capital restraints in the beginning can make buying fleet vehicles impossible. These companies turn to a closed-end fleet lease agreement which will usually cover a period of three years or more. This type of fleet leasing option will cost more than an open-end lease, and there may also be mileage, or other restrictions. Perhaps the biggest advantage to signing a long-term, closed-end fleet vehicle lease is that there's no TRAC involved.
You can change your cookie preferences or learn more about the cookies we use. Our doors are back open safely. We're ready when you are. Click here for more info. Home Blog. What is a fleet vehicle? How many vehicles are in a fleet? That said, the larger the fleet, the bigger the benefits. Does my business qualify for a fleet? What happens after I qualify? Which vehicles are available on fleet? Are fleet vehicles cheaper? Are fleet vehicles new or used?
Note: high mileage vehicles may attract a much lower price when sold. In order to keep up with this, the company may need to hire a fleet manager at an additional cost to assist. If, however, you choose to make use of a Fleet Management Service, all of this would be included.
As vehicles age, upkeep may become more expensive. Purchasing vehicles do not allow you to be flexible with this whilst the leasing option does.
All of the pros and cons need to be carefully considered before making a decision, looking at how your business will be affected both short and long-term. Toyota Fleet Management Services provide a mix of fleet finance options. Should you be looking to purchase a new or used fleet vehicle or if you are seeking access to fleet leasing, do get in touch with Toyota Fleet Management Services today or contact us on: Nothing in this article constitutes or should be considered to constitute legal, taxation or financial advice.
Before making a decision about any product or service described, we recommend that you seek independent professional advice such as from your accountant, taxation or financial adviser or lawyer, who can advise you about your personal circumstances and what would be suitable for you.
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