Dealer Leasing vs Commercial Leasing

When talking to prospective clients about the potential benefits that commercial leasing could offer their company, one of the first things that we often have to do is explain the difference between the dealer leases that they’ve seen advertised on TV, radio, and billboards, and commercial leasing. In this article, we’re going to spread that information to the masses and highlight some of the main differences between the two types of leases.

In This Article

Ease of Transaction
Cost
Flexibility

Ease of Transaction

When it comes to dealer leasing, each vehicle is going to require its own separate contract. This means that there is going to be a stack of paperwork that needs to be completed for each and every vehicle that you lease. Additionally, each vehicle is going to be billed, and thus paid for, separately. For one or two vehicles, this may not be an issue, but for a company with a decent amount of vehicles on the road, this can lead to lots of time-consuming paperwork for someone in your organization.

Conversely, when leasing commercially through a fleet management company, the process is often far more streamlined and efficient. Master contracts can alleviate the need to complete piles of paperwork for each and every transaction. Billing is also much more convenient as fleet management companies can often include all of your company’s vehicle on a single invoice, or even split it up by billing divisions.

Cost

Everyone has seen commercials on TV or advertisements in the newspaper offering a ridiculously low lease rate. However, most people don’t take the time to read the fine print. To get the advertised rate often requires a large down payment, high excess mileage fee, and super low mileage term (often 10,000 – 12,000 miles annually or less). Consumer leases are also notorious for being quite draconian when it comes to their damage-on-return charges. Couple that with the lease initiation and termination fees you’ll be charged and what is advertised as an amazing deal isn’t quite what it seems.

Commercial leases are very different. As opposed to a large down payment, commercial lessors often times only require a month-in-advance and security deposit. Additionally, while dealers may have excess mileage charges of $.25/mile of more, commercial leases charge a much lower amount (some forms of commercial leases don’t carry any excess mileage charges). This is because with a commercial lease, the fleet management company is simply looking to cover the additional depreciation to the vehicle, as opposed to using excess mileage charges as an additional source of revenue.

Flexibility

If flexibility is something that you’re looking for, a dealer lease is not going to be the best solution for your company. Dealer leases often come with strict terms that are iron-clad once signed. They also tend to have fewer options when it comes to available terms to choose from. Additionally, with a dealer lease, the only way to get out of the contract early is to pay the entirety of the remaining payments owed.

As opposed to dealer leasing, flexibility is one of the main advantages of commercial leasing. Commercial leases often specialize in high mileage terms that most dealers won’t offer. Furthermore, with many fleet management companies, it’s also possible to re-write a lease mid-term if you find that your actual vehicle usage is different than anticipated. When it comes to early termination, unlike dealers, fleet management companies are often willing to work with you to find a mutually beneficial solution as opposed to pressing you for the entire remaining amount of the contract.

For more information on whether or not commercial leasing may be right for your company, contact us today at (800) 243-0182 or send us an email to info@motorlease.com