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February 2, 2014

When Does An Operating Lease Make Good Business Sense?

The use of an operating lease as part of many businesses’ vehicle operating strategy is very popular in Australia. It provides great advantages for both a business’ cash flow position and tax deductibility.

It frees the business from the obligations of providing vehicles and all of the associated costs and financial reporting requirements, while the vehicles can be scheduled for replacement at the best interval that suits the particular business.

A Single Monthly Payment

One of the great advantages of an operating lease is the ability to have all of the associated costs rolled into a single monthly payment. It makes it much easier, with items such as insurance, registration, tyres and fuel purchases that are all included, then charged out, making record keeping and taxation a simple process.

It also saves your business time, not having to reimburse drivers or arrange payments as everything is paid for and then charged to you monthly.

Advantages for Your Business

This sort of vehicle financing product allows any business with the need for any sized fleet, from one vehicle to hundreds, to keep the best vehicle for their business needs on the road for the most cost effective length of time.

Lease periods can be set from one to five years to suit your business and cover any type of vehicle. Operating lease options allow you to have commercial vehicles and passenger vehicles in any combination to meet your business’ needs.

You also have no balloon payments to make at the end of the lease period, simply exchange the current vehicle for a newer model, or hand back the vehicle if the vehicle is no longer needed. This means you have no risk of being stuck with a surplus of vehicles or a loss of money when selling a vehicle, due to the value dropping during ownership.

When Does An Operating Lease Make Sense?

An operating lease makes sense when you need a complete fleet management service. Everything is taken care of by the leasing company and all you need to do is pay the lease payment each month.

It makes vehicle tax deductions much simpler to claim with all record keeping and a detailed breakdown of costs supplied to your business. With only a single monthly payment, which can include all your vehicle usage costs, it’s a simple solution that helps cash flow and ensures you do not have to tie up business capital in your business’s vehicle fleet.        

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