Depending on your business’s demand, owning a fleet versus leasing it entails some serious mulling over the details. Some choose to take advantage of the flexibility that comes with owning their own fleet as this gives them more freedom over usage. Others, on the other hand, want to get rid of the hidden costs that come with ownership hence opting to lease.
Still, there are others who like to get the best of both worlds, owning some while leasing a part of their fleet. Whichever is your preference, it’s important that you know what option A and option B offers so you will be adequately guided in choosing one that works for your business model.
Many business owners prefer the idea of owning their own equipment. If you have the cash, investing in growing your own fleet is a wise option. If you don’t have the cash needed for the purchase at your disposal, you can opt to get financing for the truck. Of course, when you go for this resort, you need to consider your business credit as this will be the basis for your interest rate.
Compared to leasing, a truck purchase does not entail as much fees and expenses. And while you’re going through payments, you’re also increasing your equity on the property and by the time the loan is paid off, the vehicle ownership is also transferred to you.
Owning your own fleet, however, also involves further investment on maintenance, upgrades, repairs, and even recruiting and maintaining staff. Rapidly changing tech and reforms in regulations could also mean further cost.
Meanwhile, if your credit rating is not looking well and you’re falling short on some of the requirements for financing, you can opt to lease. Leasing allows you to avoid the hidden costs of ownership. By leasing, you also put the cost of your fleet as expense, thus freeing up your credit so you can invest it for some other need.
With today’s rapid advancements in tech, upgrading is easier than replacing a whole fleet. Leasing also makes sense if you want to control your staffing costs and your business requires a particular fleet technology. Other leasing contracts may include maintenance services as well. These perks may be advantageous to operators who don’t have their own mechanics or vehicle maintenance facilities. Furthermore, there are contracts that offer service flexibility by season, allowing you to adjust your fleet usage depending on business demand.
Deciding on whether to buy or lease depends on your company’s existing conditions. Is your cash flow good enough to support a loan or a lease? How do the costs compare in both options? Do the gains outweigh the risks? Assess your situation objectively before making a move.