2002 Ad

Entrepreneur, Dec, 2002 by Jill Amadio

If YOU'RE BURNED OUT ON business debt but need new company vehicles, and your business requires four or more cars or trucks, consider a fleet leasing program. By leasing instead of buying, you won't tie up all your capital. What's more, lease payments are usually lower than purchase payments. On the other hand, the overall cost can amount to more than that of purchasing the vehicles, and at the end of the lease, the lender gets the autos back, leaving your company with no trade-in or sales assets. In addition, if your vehicles rack up high mileage, mileage restrictions may mean leasing is not for you.

If you need a new company fleet every two or three years, then leasing is recommended because you'll only pay for the cost of using the car for the length of time of the lease, which can range from two to five years. If you decide you want to buy the car at the end of the lease, you'll have to pay the residual value (see "What's the Word?" at right for a glossary of leasing lingo).

To get started on fleet leasing, first evaluate the cars and trucks your employees currently drive, taking into account mileage, purpose of use and costs so you know what your expenses are. If you need fewer than 10 trucks, your local dealer can usually accommodate your leasing needs. If you need more, consult with a professional fleet management expert catering to small and midsized businesses, such as the subsidiaries of GE Capital Leasing (www.getrucking.com), to determine which cars and trucks suit your business and budget. With the vast array of vehicles on the market, expert advice and suggestions can cut the time, effort and money that go into financing and maintaining a transportation fleet.

Whether you manage the program in-house or outsource it to a fleet management company or through your car supplier, fleet leasing makes sense economically because you can expect a 5 to 7 percent discount or higher off the vehicles' total price.