When commercial vehicles are a critical component of your company’s operations, vehicle leasing can be a great business strategy. Vehicle leasing is an affordable way to get the transportation you need without significant capital investment. This option allows for manageable monthly payments, risk management, and tax benefits. Vehicle leasing also offers you the opportunity to regularly upgrade your single vehicle or your entire fleet to the newest models and technology. If you have decided that vehicle leasing is the best choice for your company vehicles, it is time to choose a leasing partner. As you explore your options, watch out for these red flags.
Whether you are looking for vehicle leasing or loan options, we can accommodate the financing you need to obtain the commercial vehicles you require to grow your business. Learn more about First Capital vehicle financing solutions here.
Vehicle Leasing Agreement Red Flags
Low Mileage
Every vehicle leasing agreement will have a set mileage limit (number of kilometres) you cannot exceed without accruing expensive penalties. The typical mileage allowance for most vehicle leasing agreements in Canada is 16,000 - 20,000 km per year. This works out to an average of 300 - 385 km per week. Some businesses will find this limit sufficient to accommodate their operations, but if you drive every day or travel significant distances in the course of your daily business, this will not be enough. Penalties for exceeding your limit can be anywhere from 8 - 20 cents per additional kilometre. This can add up to thousands of extra dollars over the course of your vehicle leasing term. If your leasing partner has lower than average mileage allowances, does not offer a high mileage leasing option, or is not willing to negotiate the mileage terms with you, this is a red flag.
Suspicious Fees
Negotiating your vehicle lease can be confusing. Some dealerships and lessors will write up ambiguous leasing contracts that are meant to confuse, deflect, or trick you into paying more. Of course, the best way to avoid this is by choosing a reputable and recommended leasing partner, but if you are exploring your options with a new leasing company, make sure you review the contract carefully for clarity and transparency. Bogus fees like “document preparation fees”, certain “brokerage fees” and “protection packages”, some “administration fees” and unnecessary or unrequested upsells like paint protection, window tinting, or tire repairs can be expensive red flags.
Insufficient Warranty
If the vehicle you are leasing is brand new, you should be guaranteed a standard manufacturer’s warranty at the very minimum. If the manufacturer’s warranty is limited or nullified with terms in the vehicle leasing agreement, this could be a red flag. The best leasing agreements will cover at least some, if not all regular maintenance and upkeep. If maintenance through the dealership is compulsory but is not included in the vehicle leasing contract, this could also be a red flag. Make sure your anticipated maintenance costs do not make your vehicle leasing strategy unaffordable.
Restrictive Payment Schedule
The most ideal vehicle leasing partner will be willing to work with you to build a contract with terms and a payment schedule that works for your business. If your potential lessor is unwilling to tailor a leasing agreement that works within your budget or piles on extensive penalties to accommodate your company’s needs, this could be a red flag.
Poor Vehicle Selection
By the time you approach a leasing company to explore your options, you should at least have an idea of the types and number of vehicles you need for your business. The best leasing partners will be able to work with you to source the most ideal single vehicle, tankers or water trucks, specialized transportation, or fleet for your business. If the selection of vehicles your leasing partner is willing to finance is limited or they try to convince you to compromise on a vehicle that is less than ideal, this can be a red flag.
Unacceptable Buyout Terms
Buying a vehicle or vehicles for your business is no small matter. You need to balance the needs of your company today and in the future, your budget, and your cash flow. It can be easy to breathe a sigh of relief when your leasing partner offers you manageable monthly payments and just sign on the dotted line. But it is important to consider the total cost of the vehicle over the term of the contract and the buyout terms your lessor offers. Restrictive mileage, unreasonable accepted levels of wear and tear, and dubious clauses regarding the cost of purchasing the vehicle, penalties for ending your agreement early, and fees associated with surrendering the vehicle at the end of the term can all be red flags.
If you are just at the beginning stages of exploring your options for securing commercial vehicles for your business, read Is Vehicle Leasing or Vehicle Financing Better For Your Business?
Trusted Vehicle Leasing Options At First Capital Leasing
Sometimes, leasing your commercial vehicles makes the most sense. First Capital is the choice leasing partner for all of your business’s commercial vehicle leasing and commercial equipment leasing needs. Read more about the benefits of leasing and the common mistakes of leasing to make the most informed purchasing strategy decisions for your company.
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 business 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 needs. Approval can usually be completed in less than 4 hours!* If you are ready to explore loans and 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
FAQ
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 house, 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:
- Choose the vehicle(s) and the seller of your choice. Confirm the full asset details, along with the cost.
- Complete our online application, which is instantly submitted to our credit team. Existing customers do not need to re-apply.
- Once approved, a First Capital team member will contact you to discuss your financing options. We will then contact your supplier to arrange for invoicing of the purchase. Documentation is then provided for your review.
- Upon receipt of all required documentation, our funding team will work on payment remittal to the supplier. We can accommodate any prepayment or deposit terms the seller requires.
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 purchasing 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:
- Customized payment schedules that fit the cash flow of your business
- No kilometre restrictions
- No age restrictions
- Quick approvals (four hours or less) APPLY HERE
- Fast turnaround (documents signed and supplier paid is as little as 24 hours)
- High approval rates
- Lease To Purchase Options