Businesses might choose to lease their vehicles rather than purchasing them as it can have many financial benefits. How can businesses ensure they are doing their best to save money under this arrangement?
What are the benefits of renting vehicles?
For some businesses, the financial benefits of a rental vehicle can seem attractive. Businesses will obviously have to pay less upfront, making leasing a promising prospect for small businesses who may not have the money to splash out on an entire fleet.
With a full service lease, the expenses of having these vehicles become very predictable. Hefty maintenance and insurance fees won’t catch fleet managers out, as these costs are included in the plan.
The final monetary benefit of leasing is that businesses don’t need to be concerned about depreciation.
Understanding the contract
Despite the many financial benefits of vehicle leasing, it is vital that fleet managers understand how to make the most out of this arrangement.
When you agree to rent a vehicle from a provider, you are entering into a contract. It is paramount that you understand the ins and outs of the contract so you don’t come across any unexpected costs.
Will you be charged for delivery and collection? How many miles are you permitted to drive? What would the implications be if the vehicle was damaged or stolen?
Not knowing the answers to these questions could be seriously detrimental in the future. Additionally, make sure your drivers know the terms of the contract too, so everyone involved can be held accountable.
You also need to understand what condition the vehicle should be in when it is returned to the supplier. You can assume it must be cleaned properly before it goes back, but different suppliers may have differing rules regarding things such as fuel and fluid levels.
Set an end date
On that note, it’s hugely beneficial to agree a date on which the vehicle will be returned to the provider. Leaving it open ended can mean that your drivers will keep the vehicle far longer than necessary, and your business will be charged for this. Since business owners might not even see the vehicle, this extra layer of security is important.
If your driver keeps the vehicle longer than the contract allows, your business will be charged for this, but you can be certain it was the driver at fault. If you leave the contract open ended, you can’t extract compensation from the driver on the grounds that they kept the vehicle for longer than necessary, as no such time was determined in the first place.
Booking last minute tends to be more expensive. Getting a rental vehicle organised in advance further exaggerates the financial benefits of leasing.
Additionally, you might find that you can’t find the right vehicle if you leave it too late! The global shortage of parts such as valuable semi-conductors means that vehicle production across the globe has slowed. As a result, you might find that suppliers of rental vehicles don’t have a surplus of cars or vans.
This is especially important if you know your drivers will be going through a low emissions zone such as the one in London. You’ll need to get your hands on an electric vehicle if you don’t want to be hit with extra charges. Since electric vehicles are set to be an increasingly popular choice over the next decade, you can expect competition when it comes to renting one. Get it booked in before your competitors do!
Could a rental fleet replace your grey fleet?
Many businesses choose to run a grey fleet as a way of saving money. Much like leasing, they negate the need to purchase new vehicles, so can it work out cheaper in the long run.
However, grey fleets do cause some legal complications. Your drivers need to have the correct insurance, and they can claim money for having to use their own vehicles.
If you run a fleet of rental vehicles, however, you don’t need to worry about any of this! All legal considerations will be covered in the contract with the vehicle supplier. You’d be getting financial benefits of not having to purchase business vehicles, whilst maintaining a level of security and confidence.
How can Fuel Card Services help?
So you’re running a fleet of leased vehicles, and you’re saving money as a result – but could you go further?
Consider supplying your drivers with a branded fuel card. You could save up to 10p per litre on fuel costs, and also reducing your admin time with HMRC approved invoices.
Much like renting fleet vehicles, a fuel card can keep your long term costs low, meaning you have more to spend on the development and expansion of your business.
Get in touch today, and see what Fuel Card Services could do for you!