Considering investing in a company car for your business? Or perhaps you’re thinking about upgrading your current fleet? A company car can make a world of difference when it comes to the daily operations of your business, but are you making good financial decisions by purchasing rather than leasing?
Let’s delve into the world of company cars and take a look at the options available for leasing or buying a company car, as well as the nitty-gritty of each.
Buying vs. Leasing
Buying a new vehicle for your fleet is a risky decision, and there are a number of factors that should be carefully considered before you sign on the dotted line and find yourself responsible for a number of things that you didn’t think through.
The most common costs involved in managing a company car are:
- Cost of purchase
- Maintenance and repairs
Are you ready to be saddled with the responsibility that comes with owning and managing a fleet of cars? Or would you prefer to have these costs and considerations managed for you? If you said yes, you should consider leasing a car from a reputable company such as Vantage Leasing.
Leasing is a fantastic, often cheaper, alternative to buying a car for your company fleet. Let’s take a quick look at the benefits of leasing a car for your fleet:
The cost of leasing a car is considerably lower than that of outright buying one, making leasing a great option for those who need a vehicle or several and don’t have the capital to buy them.
2: Maintenance and Repairs
Depending on the type of lease, maintenance, and repairs of the vehicle are usually included in the cost of the lease. Do, however, pay close attention to the terms and conditions of the lease to determine what is covered and what is not.
3: Little to No Liability
If you want the flexibility of owning a car without the additional liability and worry that comes with making this kind of investment, a lease car should be your first choice. From operations to maintenance, there is very little you would need to worry about when you lease a vehicle for your company.
Types of Leases
Let’s now say that you’ve decided to lease a car. Do you know about the different types of leases available and what each entails? Here is a quick breakdown of two of the most popular lease types for company fleet leasing:
Open-end leases are considered short-term and run for a year at a time in most instances. Once the initial lease period is over, the lease is continued on a month-to-month basis. While this is a great option for those who want newer cars more often, there are a few disadvantages that you should be aware of.
The disadvantages of open-end leasing:
- The lease does not include maintenance and repairs of vehicles.
- A terminal rental adjustment clause (TRAC) is included in the leasing contract. This clause ensures that the lessee is responsible for keeping the vehicle at its defined resale value while the car is in its possession. The lessee is ultimately responsible for paying the difference in value if there is one.
Closed-end leasing is a long term-leasing option that requires a lease period of no less than three years. While this lease might cost more (as you are paying three years worth of installments rather than potentially one) than an open-end lease, the cost includes maintenance and repairs on the vehicle for the full lease period.
Often called walk-away leases, closed-end leases do not carry the TRAC clause that you would be liable for with an open-end lease.
What to Consider when Buying or Leasing a Car for Your Fleet
Regardless of your decision to buy or lease, there are a few considerations that you should keep in mind when shopping for a new (or used) vehicle.
Here are a few great tips and tricks to help you choose the best vehicle for your money:
Tip 1: Set a Budget
A budget is always a great idea. This can help narrow down the search for a vehicle when you know how much you can comfortably spend. Speak to your dealer or sales associate about how much you are really willing to spend on a new or used vehicle, and try to work within those parameters.
Tip 2: Think About What You Need in a Vehicle
Consider the type of vehicle you are looking for. What will it be used for most, and just how much mileage do you think you will put on the odometer per year? These factors can significantly narrow down the search for a vehicle. Be sure to share them with the sales or lease associate.
Tip 3: Look at the Incentives and Extras Offered
Does the vehicle come with a maintenance and repair plan? Or will this need to be paid over and above the costs of keeping a vehicle in good working order? If you are leasing, choose a lease plan that includes maintenance and repairs of the vehicle. Take out this optional extra if you are buying your vehicle outright.
Tip 4: Shop Around
Don’t settle for the first vehicle or dealership you visit. Shop around for a good deal, and try to cut costs where possible. Discuss your options with the dealer or leasing company. Do your own research on the different costing options of the vehicle you are interested in. Strike up a bargain if you can as well.
A company car or fleet is not just a nice-to-have and can make a difference in the daily operations of your company. But, a vehicle is by no means a small expense and should be chosen with care.
Leasing is a great option for those who want the convenience of a car without the additional costs that come with maintaining a vehicle. There are a few leasing options available, so choose one that suits your needs and your budget.
Follow our great tips above to help you choose your next vehicle. Be sure to learn more about the options available to you.