Is It Better To Lease Or Buy Vehicles?

The answer boils down to each company’s individual needs


“Often times, a major cost savings comes from a reduction in maintenance expense because leasing companies have predictive and preventive maintenance down to a science,” adds Hunter of PacLease.

Plenty of Options

There are many considerations to both owning and leasing trucks. With leasing, there are a variety of lease arrangements, kinds of leases and options. This leaves lots of gray area but gives a company the ability to pinpoint its needs and customize its approach.

“Some companies may choose to own their own vehicles for various strategic and tax reasons,” says Ryder’s Deris. “This, however, does not mean they also have to perform their own maintenance and keep the maintenance structure. Companies who own their own fleets can still choose outsourced maintenance services while maintaining ownership of the asset.”

“One of the primary benefits of owning trucks is the flexibility around vehicle disposition timing,” GE Capital’s Blais says. “There may also be regulatory or hazmat concerns that could make leasing difficult.”

There is a perception that truck ownership provides better control for the company, notes PacLease’s Hunter, but this may or may not be the case.

“In many situations, there is inherent risk associated with owning trucks,” he says. “Some of these risks include the value of the equipment at trade-in time, unpredictable maintenance costs over the equipment life, obsolete or stranded assets due to improper replacement cycle and increased costs caused by hiring, training and tooling technicians to keep up with ever-changing truck technology.”

Less Worries

Leasing can also provide a variety of additional services. For example, some leasing companies offer substitute vehicle programs that deliver replacement units while the leased trucks are being serviced. A vehicle lease can be combined with a maintenance package.

“One key difference is that in addition to providing a financing source, a fleet management company also offers value-added services such as a managed maintenance program, truck engineering support, fuel, accident, registration, compliance management and consulting services focused on helping companies reduce total life cycle costs,” says GE Capital’s Blais.

“Leasing can give a company the ability to minimize the risk of fluctuating costs in maintaining a fleet,” Vicha of NationaLease concurs. “Full-service leasing allows companies to manage their business to set fixed costs each month from their fleet of vehicles that remains consistent over the life of the truck.”

“Companies are currently experiencing a tight credit environment and may prefer to invest their cash in other areas of their business as opposed to tying it up in transportation assets,” says Ryder’s Deris. “With post-EPA 2010 engine technologies, the initial investment of buying a commercial vehicle has increased.”

“The benefits of leasing trucks are financial and operational,” Hunter adds. “Financially, a company can preserve capital for other parts of its business that generate a higher return. Operationally, leasing allows a company to focus on core functions of its business. Leasing can provide considerable flexibility to meet short-term and long-term equipment needs by custom tailoring a lease and maintenance package that matches the truck’s useful life.”

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