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Leasing a Fleet: Advantages and Drawbacks

by: sahil | last updated: March 23, 2010
Category: Lease vs. Buy | Tags: lease, car lease, vehicle leasing, car, vehicle, buying cars, buying Vs. leasing, fleet of vehicles, fleet leasing

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Leasing a Fleet: Advantages and Drawbacks

A fleet of vehicles is usually leased or sometimes bought by companies who need a large amount of vehicles to cater to the needs of their consumers. This fleet of vehicles can range from cars or vehicles such as delivery vans and trucks. Small businesses also benefit because of such vehicle leasing. The option of leasing a fleet of vehicles is financially feasible for the company or firm since it signs the lease in bulk. However the wear and tear in such fleets is considerably higher compared to personal leases.

Small businesses as well as huge entities such as U.P.S (United Parcel Service) can benefit from such leases. The advantage in such type of leases is dual and beneficial to both parties involved since the lessee gets to use vehicles at a very economical rate and the lessor ends up leasing more vehicles in bulk. However the road for such fleets is long and hard indeed since they are handled roughly and used by numerous drivers.

In order to counter such measures companies that are involved in such areas give special training to the drivers concerning safety and create risk profiles and use methods such as vehicle tracking in order to avoid catastrophe or misuse. Many companies around the world offer fleet vehicles to their employees as well, which are usually leased, and are subject to the fringe benefit tax for these fringe perks received by the high ranking employees.

Fleet management is a part of fleet leasing or buying when it comes to large firms or companies. Fleet management aims to reduce the wear and tear of the vehicle and ensure optimum utilization of these automobiles till the end of the lease term or till the company buys or scraps it. This type of management is done through vehicle tracking, driver behavior, mechanical diagnostics, and other methods such as fleet and security control. This is essentially done for safety as well as for minimizing the residual value of a vehicle on lease or extending the life of the car or automobile.

Therefore, leasing a fleet of vehicles, cars, or trucks is sometimes a necessity for the company or it can be a luxury or fringe benefit. In countries such as Australia, novated leases are offered to employees in order to give them tax breaks as well as fringe benefits. However these fringe benefits may be taxable in many countries and cases.

In other countries fleet management software can be used in order to make the lease financially feasible. This software is complicated and gathers, stores, processes, monitors, reports on and exports data. Data can be absorbed from external sources such as gas pump processors, HM Revenue and Customs, VOSA, the DVLA, CAP, Transport for London and the Motor Insurance Database and from internal sources for instance Human Resources and Finance.