Is it time to think about new company vehicles? One of the most important fleet management strategies concerns leasing or buying your cars. For some companies, the choice is clear, and it’s easy to see why one strategy is better than the others. However, this isn’t always the case, and it can take some time and effort to reach the right decision. In most cases, leasing is the best strategy and here are some reasons why.
Easy Budgeting
If your fleet management strategies place an emphasis on budgeting, leasing is the right choice. With leasing, you know how much your monthly expenses are. The depreciation is already figured in, so you don’t pay the entire purchase price of your vehicles. You’re only paying for the time your employees use them. Here is an example.
Suppose your vehicles cost $30,000 each. When the lease is over, they may only be worth $12,000. Your lease payments cover the $18,000 in total depreciation, so you save $12,000.
Keep Your Line of Credit Open
When you purchase your fleet, you have to take on the entire financial responsibility. This can keep you from getting financing for an important project. With leasing, your capital is not all tied down. You never know when you’re going to need it.
Did you know some leases don’t have to show up on your balance sheets? This is a great way to extend your line of credit and enhance your creditworthiness.
New Vehicles are Poor Investments
If you are looking for good investments, new cars or vans are not the best fleet management strategies. You lose a great deal of value in just the first year, and as the vehicles age, they gradually become worth less and less. Eventually, their value is only a small fraction of their original cost.