Overlooked Considerations in the Lease vs Purchase Debate

When discussing the lease vs purchase dilemma, most people tend to immediately focus on the financial aspect of the discussion. This is understandable as money is always an important consideration. If you’re looking for in-depth information on conducting a financial, lease vs purchase analysis, Automotive Fleet Magazine has put together a comprehensive article on the subject, which you can read here. However, there are other factors that come in to play as well. In this article we will discuss some of the more overlooked aspects of the debate, and describe how they might impact your company, and your bottom line.

Corporate Image

The vehicles used by your business are part of your overall corporate image, and as such, should be held to the same high standards of professionalism that you would expect when it comes to employee attire or personal conduct. Leasing makes this simple because vehicles are cycled out every few years. This results in drivers continually being placed in late model vehicles with the newest available technologies. Typically, purchased vehicles tend to be held longer, which can result in a worn and dated appearance if not meticulously cared for. A few dings and dents, or a cracked mirror may not seem like a major issue, but things like that can have a significant impact on how your company is perceived by the outside world.

Maintenance and Repairs

Most people are unaware of the amount of time and energy that goes into managing repairs and maintenance for an entire fleet of vehicles; each vehicles’ routine maintenance needs have to be analyzed, a schedule has to be developed, vehicle ages and mileages need to be routinely monitored, local service facilities have to be coordinated with, repairs have to be negotiated, payment arrangements must to be set up, insurance companies have to be contacted in the event of an accident, the list goes on. The difference between leasing and purchasing is who will be tasked with handling all of those responsibilities. Under an ownership program, the onus lays solely with the company. Someone, or multiple people, within the organization will need to be assigned to handle those chores. Alternatively, a company who chooses to lease their vehicles can pass those burdens off to someone else. A well-constructed leasing solution might even allow the company to build a maintenance program directly into their monthly rental rate, either on a managed, or in some cases all-inclusive basis. The advantages of this type arrangement are two-fold. Firstly, having the services built into the monthly lease rate allows the company to accurately budget their expenses years in advance. Secondly, less time spent worrying about the fleet, and more time dedicated to focusing on the company’s core business.

Administrative Tasks

Keeping a fleet on the road is no easy task. There are a myriad of administrative tasks that take place behind the scenes in order to keep operations running smoothly. Vehicles need to be registered properly, renewals have to be meticulously tracked, insurance cards have to be distributed, toll violations and tickets need to be tracked and managed, vendors need to be paid, fuel cards have to be managed, etc. Things become even more complicated when a fleet is geographically dispersed, as laws and requirements can vary widely between states, counties, and towns. On the back end, someone needs to be responsible for deciding the proper time to cycle out vehicles, determining the method of disposal, and completing the necessary paperwork.

If a company elects to purchase their vehicles, they’re going to have to dedicate valuable manpower toward managing those duties. Depending on the size of the fleet, it may even require a dedicated team.

Leasing can absolve the company of nearly all of those responsibilities. With leasing, the company is able to construct a unique program that will defer the administrative burdens associated with company vehicles to a fleet management partner. This saves the company valuable time and money, and allows employees to remain focused on their main responsibilities.

The decision about whether to purchase or lease company vehicles is very situation dependent and requires careful thought and analysis. If you would like to further discuss your options so that you can make the appropriate decision for your company, give us a call at (800) 243-0182 or email us at info@motorlease.com