Vehicle Leasing Saving Business in Recession
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Many businesses traditionally support their transportation needs by purchasing vehicles from local dealers. Being local means that they are ideally located to support servicing and maintenance. Business will usually negotiate a significant discount due to the quantity of vehicles required and the ongoing business they will be providing to the supplier.
The current recession is prompting many businesses to look at alternative ways that they can provide and finance their transport needs.
Business accountants want to cut transportation costs, but this must be achieved without risking profitability. Many businesses are cutting back on their company car provisions. Instead of providing their executives and sales people with their own dedicated company car, bought from the local dealer, many are turning to business car leasing arrangements. Some businesses are now using a car pool of leased vehicles rather than providing dedicated company cars.
It is estimated that as much as 20 to 60% can be saved by leasing rather than purchasing vehicles for business.
The leasing approach has been taken by many companies who rely on their commercial vehicles and vans. Leasing vans and trucks is not new to business but was previously primarily used by larger organizations. The current recession has led to many small and medium size enterprises opting to lease their commercial vehicles rather than buy them outright.
Automobile leasing provides a number of advantages over outright purchase which are all particularly good for businesses weathering the current economic decline. There are tax advantages for most businesses and the fixed monthly payments help accountants to budget their transport costs.
One of the main disadvantages is that the business never actually owns the vehicles which remain the property of the vehicle leasing company. A potentially significant disadvantage is the requirement to stipulate the anticipated annual mileage when the contract is agreed.
If you are a business, of any size, you would do well to research how much you could potentially save and the advantages that vehicle leasing could bring to your business.
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