If you’re considering a fleet for your business, one of the questions that will need answered is if you will buy or lease the company cars. Both come with their own advantages and disadvantages however, it all depends on your business size and purpose. Fuelcards.com have gathered the main considerations when looking at buying or leasing a fleet. So, lets kick off with buying.
Pros of Buying a Company Vehicle
Complete control
When you buy a company car, it is yours to have for however long you want. This means that you can use it for whatever purpose you need to. This is beneficial for HGV drivers who build up miles on long journeys due to leasing having a mileage limit.
Ability to re-sell
Another benefit of having complete control over the vehicle is that you can resell it whenever you want. So, if you no longer need the car or wish to upgrade, you can sell it to a new owner to gain the money back.
Avoid damage costs
If you own the company vehicle, you won’t face extra charges if it becomes damaged. Yes, you will still have to pay out of your own pocket to get it fixed. However, leasing cars comes with extra costs as you don’t actually own the vehicle.
Cons of buying a company vehicle
Upfront cost
Buying fleet vehicles outright is a good idea but only if you can afford it. For example, if you require three fleet vehicles, that is a large amount of money your business will pay upfront in comparison to leasing. Therefore, this may be suited more to well-established companies who generate a steady income.
Allocate a fleet manager
When you begin to run a business fleet, it can be beneficial to appoint a fleet manager to ensure vehicles are maintained and to manage the admin side of things with regard to invoicing and fuel cards.
Maintain and manage vehicles
Like any car, it’s important that you take care of it to ensure it lasts long. With buying company vehicles, it is your business’s responsibility to keep maintenance up to date, which also comes out of the company’s pocket. Regular maintenance checks can add up which is why leasing might seem like the better option as you normally receive help from the supplier.
Pros of leasing a company vehicle
Cheaper
The main benefit of leasing company vehicles is that it’s easier to afford. Most suppliers ask for an initial upfront payment which is followed by monthly instalments which provides an easy payment plan. This means that your company doesn’t have to worry about spending all at once!
Flexible
Once your contract hire agreement has ended, you can choose to hand back the current vehicle and start a new contract with a new model or make of vehicle. Some people prefer this as they can change up the car they are driving or opt for a different fuel efficiency.
Cons of leasing a company vehicle
You don’t own the vehicle
The huge downside to leasing a company vehicle is that you don’t own it during your agreement. Therefore, you might not have peace of mind while driving and feel like you are driving someone else’s car. This also means that the car must be returned in good condition to avoid extra costs.
Mileage limits
Leased vehicles come with a mileage cap due to there being future users. This might not be a good idea if your purpose of company cars is to travel long distance. If you return the car with excess mileage, you will incur additional fees. However, fuel cards are a great way to monitor mileage as you can monitor how far your drivers are going.