When adding vehicles to your fleet operation it can be difficult to decide between buying or leasing assets. There are pros and cons to both, and it can come down to a fleet’s priorities, preferences and financial situation.
Leasing Fleet Vehicles
When leasing vehicles, fleet operations acquire the vehicle for a set amount of time without establishing ownership. One of the biggest benefits of leasing is fleets can usually negotiate terms to get a low monthly fee for the vehicle. Leasing also provides the following advantages:
- It’s easy to replace a vehicle. When a new vehicle is needed, operations can typically request an additional asset from a lessor and take on its monthly payment.
- When the lease is over, the lessor will take back the vehicle, removing it from the fleet operation. This allows for an easy way to dispose of vehicles, while also avoiding having an excess of assets at the operation.
- Leasing a vehicle results in flexible cash flow for the operation due to the low monthly payments.
- Vehicles typically require low to no maintenance.
- Drivers can have a higher morale due to operating newer vehicles with limited issues.
While there are advantages to leasing vehicles, there are also disadvantages. When leasing a vehicle, the fleet operation will have to pay the monthly payment for the duration of the lease, meaning there isn’t a time they won’t be without a payment. The operation may also have to follow set guidelines or restrictions on the usage of the vehicle as set by the fleet operation.
Owning Fleet Vehicles
Purchasing a vehicle means the operation will own the asset outright. While this can be considered an advantage for the operation, there are other pros and cons to consider when purchasing vehicles for your fleet.
Some of the advantages can include:
- Owning the vehicle outright once it is paid off.
- Flexibility to perform needed upgrades and maintenance without being restricted by a lessor’s regulations.
- Keeping the vehicles as part of the fleet long-term.
There are also some disadvantages to purchasing fleet vehicles. Some of these can include:
- Budgeting to buy new vehicles.
- Hanging onto vehicles for longer than operations want due to lack of funds to replace the assets.
- Requiring more maintenance as the vehicles age.
- Risking driver frustration as vehicles breakdown and require repairs.
While there are pros and cons to both buying and leasing vehicles, the decision needs to be made by your fleet operation to determine what makes the most sense for your operation and its needs.
To learn how RTA Fleet Management Software can help improve your fleet operation, contact us today to schedule a demo.