Commercial Car Leasing: Everything You Should Know

One of the most important investments and at the same time one of the most expensive investments that businesses should take is to provide their employees with business vehicles.

As previously said, providing employees with business vehicles most commonly means purchasing one- which means a large lump sum payment.

Yet, most business owners do not want to make that final purchase.

Hence, many businesses in the USA nowadays have found other options to obtain a new vehicle- such as is the one of commercial car leasing.

The option of commercial car leasing won’t keep you a large sum of money.

By taking this option you will have a good cash flow and will be in the situation to stay agile.

So what exactly is commercial car leasing? And how does it work?

Let’s find out!

What Is Commercial Car Leasing?

To start by clarifying what actually a commercial car leasing is.

Commercial car leasing is gaining more in popularity.

The actual commercial car leasing or also known to many as business car leasing is when a given business is leasing cars for their company employees.

The leased commercial cars should be used for work purposes only.

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In return for the leases, the business pays an agreed monthly amount to the lessor.

As previously mentioned, commercial car leasing is gaining more in popularity and it is mainly so because they allow businesses to supply new vehicles to their employees without making an actual purchase. After all, asset outright can be both potentially costly and time-consuming.

What Are Some Of The Features Of Commercial Car Leasing?

Commercial car leasing comes along with few features. Which features can be beneficial for the businesses that decide to go for commercial car leasing.

In addition, the first and foremost feature is the access to upgrades. That is to say, the access to upgrades enables the user to receive a new car each time he/she renews the contract.

Looking on the positive side, this commercial car leasing feature will help your employees to enjoy all the benefits that come from driving a new car. By that, you will also maintain a professional company image and reliability.

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On the other hand, we have the support feature. Yet, what does this feature includes?

With the support feature, commercial car leasing users can enjoy a peace of mind because the leasing companies will manage the aspects of running your fleet.

So, we’ve come to the feature of keeping your people in well-maintained vehicles.  Leaving any concerns that your staff should be using their own vehicles can be put aside thanks to the commercial car leasing.

Having a car that is fit for the purpose of your business and employees can definitely bring you peace of mind.

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At this point of view of commercial car leasing we encounter the fixed payments feature.

It is good for you to note that, when utilizing commercial car leasing, you will be able to make a fixed monthly repayment. This agreement will help you determine your annual budgeting.

Nonetheless, all these features of commercial car leasing that I have mentioned can help you avoid being adversely by depreciation with fluctuation in the car re-sale market.

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Leasing vs. Buying a Company Car

Every business structure and financial situation is different. Starting from this fact, we can enumerate that there is no magic formula that businesses can use in order to determine whether they should choose to lease or to buy a company car.

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Hence, there are always few crucial things that should be taken into consideration:

  1. Mileage– This is an important thing that should be taken into consideration because after all mileage is an important cost and as such it must be factored in. In general commercial cars are typically more driven that personal cars are;
  2. Length of Ownership– On the other side we have the length of ownership, which is one of the most important factors in commercial car leasing because it indicates for how long does your business plan to have the car.
  3. Total Cost of the Car– The total cost of the car brings important considerations in regards of the value of the car at the end of the lease. You can make an appropriate comparison between the lease vs. the ownership period. Yet, when calculating the total cost of the car- you should not forget to include the taxes too.

Source: www.businesscarmanager.co.uk

Nonetheless, if you decide to go for commercial car leasing, then you should know that there are two options that the leasing company will offer you. An open lease or a closed lease.

Yet, before you make the final step, you will have to have in mind the following information about the car:

  • The manufacturer’s suggested rental price;
  • Down payment;
  • Final negotiated price of the vehicle;
  • Usage tax;
  • Length of the lease;
  • Car value at the end of the term- that is to say the residual value;

Hence, before signing any commercial car leasing contract you will have to make a choice between open lease or a closed lease.

Open Lease vs. Closed Lease

What is an open lease? What is a closed lease? More importantly which the difference between an open lease vs. closed lease is?

To start with the open lease.

Source: www.carprousa.com

Most commonly leasing companies are suggesting open lease for commercial car leases. It is so because, through the open lease, the lessee is paying the difference between the residual and the actual resale value– at the end of the lease.

In general, if it happens that the vehicle is driven more than it was estimated that it would be driven, then it can result in an increased cost for the lessee.

Hence, if it happens a situation like this, then the lessee will pay only for the extra mileage.

On the other hand, the closed lease is gaining more popular amongst consumers. It is so because at the end of the lease term, the lessee of the car can enjoy his/hers buying options.

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