If driving or distance travel is a requirement for your workforce most employers have two options: a car allowance or a company-supplied fleet vehicle. There are benefits to both. A car allowance can be a cost-effective solution, especially if your business only has a couple of employees who need to drive to support your operations. Your business does not need to purchase or lease vehicles, register and insure the car, and maintenance and repairs are the responsibility of the employee. But when your company has multiple drivers and employees who travel often for work-related tasks, consider providing a company car through vehicle leasing. There are many benefits to businesses that provide leased vehicles for employee use. Read more about the pros and cons of vehicle leasing for your company to decide if it is the right transportation solution for you.
The Pros Of Vehicle Leasing
Control Company Image: If your business relies on maintaining a particular public image, vehicle leasing gives you the opportunity to ensure that each client-facing employee is upholding your image. For example, if your business includes the sales of high-end products or services, you could compromise that image if a sales representative arrives for a client meeting in a dilapidated, rusty vehicle. Or if you provide on-site services like landscaping or roof repair, a banged-up, poorly maintained work truck could compromise your customer’s perception of your business as detail-oriented and competent. Vehicle leasing lets you choose the make and model of vehicles that best suits your image.
Advertise Your Brand: When your strategy is a car allowance for employees who need a vehicle to do their job, you cannot dictate that they brand their vehicles with company logos, etc. If you choose vehicle leasing for your company cars, you can opt for vehicle wraps, decals, logos, and more for a cost-effective advertising opportunity. Branded vehicles are a great way to get your name out and reinforce your presence within your target markets.
Ensure Employee Safety: Simply giving your employees a car allowance offers very little control over their vehicle choice and the safety and reliability of their vehicles. When you choose a vehicle leasing strategy for your employee fleet, you can choose cars, vans, and trucks with high safety ratings and enhanced safety features like cameras, blind-spot monitoring, and driver-assist features. This will give you peace of mind that your employees are protected, but can also protect you against liability claims.
Leverage Fleet Volume: Even if your company fleet is only two or three vehicles, you can often leverage volume advantages when vehicle leasing and insuring. Many vehicle leasing providers will offer beneficial pricing to secure your business for this round of vehicles and to ensure you choose them when it is time to upgrade at the end of the vehicle leasing contract.
The Cons Of Company-Supplied Vehicles
Large Upfront Expenses: One of the main disadvantages of building a fleet for your workforce can be the upfront costs associated with securing several vehicles at once. Vehicle leasing (instead of purchasing outright) can alleviate some of this burden. Many commercial leasing providers will work with you to customize a payment structure that works for you. This makes budgeting easier and lets you maintain your cash for other operating costs. And when compared to traditional vehicle loan agreements, vehicle leasing payments are often lower.
Maintenance And Repairs: When you choose to maintain a vehicle fleet for your employees, the costs and responsibilities of maintenance and repairs fall to the company. These expenses can quickly add up. But if you choose a strategic leasing agreement, many of the costs associated with vehicle wear and tear and use can be mitigated. Work with your leasing partner to coordinate your lease term with the manufacturer’s warranty and much of the servicing, maintenance, and repairs will be covered over the term of the lease. When your vehicle lease terms are nearing their end, you can upgrade to newer models and avoid the expenses associated with older vehicles.
Liability Of Depreciation
Vehicles depreciate, rapidly; up to 20% in their first year and up to 40% over the first five years. When your company owns the fleet, the cost burden of depreciation can be significant. When you choose vehicle leasing instead of vehicle financing or buying your fleet outright, the burden of depreciation does not fall on the lessee. The terms of the lease agreement are set at the time the contract is signed and market fluctuations, etc. have no bearing on the value of the vehicle at the end of the lease term.
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to decide which is better for your business.
When you are trying to decide if providing your employees with a car allowance or providing a company car is more beneficial to your business, consider the advantages of vehicle leasing to build your business fleet. With advantages such as manageable monthly payments, tailored payment plans, mitigated risks, and lease-end options, vehicle leasing may be the right solution to access the vehicles you need to get the job done right while protecting your employees, your business, and maintaining the cash flow that is critical to your operations.
Not every commercial vehicle leasing provider is committed to protecting your company.
Learn how to protect your business by reading
Watch Out For These Red Flags When Shopping For A Vehicle Lease.
First Capital Leasing is a full-scope financial services provider with the knowledge and experience to create tailored financing solutions that meet your needs and your goals for your company. We can help you figure out which strategy can support your current operations now and in the future. We are based in Calgary, but serve businesses across Canada. For easy application and quick approval, fill out our online application. You only need to apply once and First Capital leasing will continue to be your financing partner for all your business equipment and vehicle leasing needs. Approval can usually be completed in less than 4 hours!* If you are ready to explore vehicle loans and vehicle leasing for your business, call our team at First Capital Leasing at 1-888-251-3644 or fill out our contact form today.
* Subject to credit approval
Q: Are there restrictions to the type of vehicle I can lease?
A: Most financial institutions have stringent restrictions on what can be financed. However, at First Capital Leasing, we will work tirelessly to get you the commercial truck or vehicle your business needs regardless of the year, hours, or kilometres, including water trucks and tankers. We can also accommodate any supplier(s) and auction houses, as well as private sale transactions to ensure your business has the vehicles it needs to thrive and grow.
Q: How does my business explore commercial vehicle leasing with First Capital?
A: Our process is simple:
If you have any questions or need more information about which First Capital financial solutions might be right for you, call us at 1-888-251-3644 or fill out our contact form today.
Q: What are the benefits of choosing First Capital Leasing for my vehicle leasing needs?
A: If commercial vehicle leasing is the right option for your business, partner with First Capital Leasing to make acquiring your vehicles easy. With over 85 years of combined experience in commercial vehicle leasing, we have the knowledge to provide you with the right vehicle leasing solutions for your business. The benefits of partnering with First Capital for vehicle leasing include:
We'd love to have the opportunity to understand your business and develop a strategy customized to your business' short-term needs and long-term goals. We boast a 95% approval rate through our vast network of underwriters (including a robust private portfolio).
Contact us at 1-888-251-3644 or complete the online contact form below. We look forward to connecting with you.