Leasing

LEASING VS DRIVER REIMBURSEMENT
LEASING		DRIVER REIMBURSEMENT
Leasing is an efficient and economical method of vehicle acquisition and fleet administration. It allows a company to preserve capital for expansion or research, to improve cash flow or for business improvements. It also provides a strong management and assessment tool for their fleet performance.			Driver reimbursement generally represents great disadvantages to a company’s employee. The perk of being able to select any vehicle the driver wishes is soon outweighed by the increased costs, record keeping and the impact to his/her personal financial situation. It also offers the least amount of control by the employer over operating costs, safety and reflection on the company.

ADVANTAGES		ADVANTAGES
	Control over image and suitability of vehicle		Unlimited vehicle selection to driver
	Vehicle under manufacturer warranty majority of road life		Purchasing, maintenance and selling are done by the employee
	Maximizes company fleet costs		Monthly costs are fixed
	Paying only for actual vehicle value usage		The employee does mileage tracking and reporting
	Purchasing power due to lessor’s volume and association in auto industry		No balance sheet effect to the company
	Competitive funding rates warranted by company’s financial strength		No company tracking management necessary
	No upfront costs		No vehicle costs exposure due to terminated/transferred employee
	Sales tax on payment only where use/rental tax applies
	Predetermined pricing with discounts not always available to employee	DISADVANTAGES
	Unrestricted choice of make & model		No control over vehicle selection, condition and resulting reflection on company image
	Professional expertise in vehicle selection		Longer use resulting in higher repair costs/operating costs
	Lease experts managing and monitoring fleet effectiveness and efficiency		No assurance of safety/reliability of vehicle
	Vehicle maintenance monitored to maximize vehicle performance		More downtime when company not monitoring maintenance
	Budgetable, predictable monthly cash flow		Vehicle generally more expensive/lack of purchasing power
	Consolidated monthly billing		Initial cash outlay required by employee personally
	Lease-end vehicle values maximized due to options available for used vehicle disposal/remarketing		Funding more expensive
	Off blance sheet transactions		Personal insurance more expensive due to business use
			Alternate transportation utilized to save vehicle value
DISADVANTAGES			Company liability exposure for vehicle used as business tool
	Exposed to fluctuations in used vehicle market		100% sales tax exposure to employee
	Limited under certain tax situations		Retail only incentives available to employee
	Liability exposure		Employee responsible for legal registration/operation
			Tax reform has reduced tax benefits to ownership
			Limited remarketing options
			Negative equity exposure to employee due to vehicle usage value outpacing monthly payment
			Employee dissatisfaction
			Loss of recruitment and/or employee retention

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