Vehicle Leasing
| Pages | 8-9 |
| DOI | https://doi.org/10.1108/eb057250 |
| Published date | 01 May 1982 |
| Date | 01 May 1982 |
| Author | Stephen Poster |
| Subject Matter | Economics,Information & knowledge management,Management science & operations |
Vehicle Leasing
by Stephen Poster
Managing Director, Lex Vehicle Leasing
The cost of transport is one of the highest single items of
expenditure a businessman has to face. These days a basic
Cortina can set you back £4,500, and cost at least half as
much again a year to keep on the road. A Rover 3.5 would
cost double, and a medium size truck will leave little
change out of £30,000.
Cars involve far more than mere capital expenditure, of
course. Administrative staff and resources are needed to
handle purchasing, taxation, and licensing. And garage
space and skilled mechanics are required to carry out the
repairs and maintenance.
Imagine how simple it would be if instead of having to
bother with these obstacles, a businessman could have the
use of a vehicle with hardly any cash outlay or demands on
his time, and leave all the vagaries of vehicle administra-
tion to somebody else for a monthly payment. This in fact,
is the way company vehicle operations are tending through
leasing. Leasing is strictly a financial arrangement where a
company pays a monthly rental to use a vehicle instead of
forking out cash.
This has a number of advantages:
Greatly improves
cash
flow. A new four-door 1600 Ford
Cortina will set you back around £4,500. To lease it would
cost £178 a month, and every single penny of it is tax
deductable. In both cases you get the whole exclusive use
of the vehicle, but with leasing you don't have to shell out
a substantial capital sum for the privilege.
No interest
charges.
The cost of short term loan of £5,000
at today's interest rates can be crippling, and if four or five
cars upwards are involved the sum can be a real and serious
drain on a company's resources. Leasing does away with
the need to borrow large amounts of expensive money to
buy vehicles, and the subsequent financial clobbering from
the bank manager.
Leasing also means that your hard-earned profits don't
have to be tied up in motor vehicles, but can be used for
something more profitable like buying new premises or
widening the range of services offered.
Budgeting simplified. All leasing payments are known in
advance, fixed for the length of the leasing contract, nor-
mally two or three years, and sent as one bill at the end of
the month. This can dramatically cut expensive accountan-
cy time and make budgeting for the future simplicity
itself.
Vehicle acquisition
simplified and
speeded
up.
Any vehicle
leasing company worth its salt can obtain vehicles more
quickly and at a cheaper price than a customer can because
of contacts in the motor trade and the very favourable
bulk-buy discounts they can negotiate. The cheaper price is
passed on to the customer, as a reduced leasing charge.
Reduced administration. The hassels of finding and ac-
quiring a vehicle or vehicles, arranging the finance,
overseeing delivery, checking for faults and generally
preparing the vehicle for the road are handled by the leas-
ing company saving hundreds of pounds worth of ad-
ministrative time.
Free
loan
car.
If any vehicle is going to be off the road for
more than 24 hours then a loan vehicle is delivered to your
door free of charge, saving the expense and aggravation of
short term hire in the event of breakdown. (N.B. only a
few leasing companies offer this as a standard service).
Free
fleet advice into the bargain. Good fleet advice is
worth its weight in gold. A company could be wasting
many thousands of pounds a year, without even realising
it, simply by using the wrong vehicle for the job.
Perhaps smaller vehicles could be doing the work just as
well, but at a cheaper price. Or even eight vehicles could be
doing the job that ten are doing now, or a different vehicle
in a cheaper tax or insurance bracket could reduce running
costs.
This is where an experienced motor dealer can help.
Every company has its own unique requirements, and they
need to be discussed, analysed and then matched to the
right vehicle for
the
job.
Of course this type of fleet advice can be bought as a ser-
vice,
and it is quite likely that a company will save
themselves a great deal of money in the long term by doing
so.
But with leasing the fleet advice is free. All part and
parcel of the leasing package. In practice this means we
always go and see a customer first and discuss his transport
8 INDUSTRIAL MANAGEMENT + DATA SYSTEMS
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