To lease or not to lease … why is this still a question?
Businesses are still unsure why commercial fleet leasing might be a better choice than purchasing. I spend a lot of time getting businesses to understand the advantages of commercial leasing; then I spend more time getting them to actually sign a lease. First thing I need to do is convince prospective lessors that leasing is probably a better value for their business than purchasing. When I talk to those putting together a fleet of vehicles for their company (or already have a fleet and need to replace or add a new vehicle), I like to quote oil baron Paul Getty, who famously stated, “If it appreciates, buy it. If it depreciates, lease it.” Leasing provides “True Cost Financing,” and payments can be lower because they are based on the “true cost” of the vehicle - the portion you actually use. Today, many small and large companies have discovered the value of stretching their budgets - and improving their cash flow - by leasing their vehicles.
Seems simple enough, right? A healthier bottom line should be enough to convince people. But I still run into a lot of resistance. Why? Granted, deciding to lease rather than purchase does require a change in mindset. For somebody used to purchasing, the idea of leasing, even when well explained, can feel like a leap of faith – and it’s hard to get someone to give up their old religion. Even more resistance comes because the person acquiring vehicles for their company often isn’t a financing expert – it’s an additional responsibility to their job function – and they dread the experience. The thought of their having to endure a day at a local dealership listening to sales pitch after sales pitch about model after model can feel like the equivalent of nails on a chalkboard. Instead of getting clarity, they often end up with even more questions and concerns, and the little voice in their head that says, “Buy, buy, buy,” starts getting louder.
Something else that may be causing skepticism about commercial leasing could be the TV commercials that feature personal vehicle leasing options. We’ve all seen these ads with the hard-to-read disclaimer copy thrown up on the screen while the announcer talks very fast. They’re typically aimed at the needs of a certain type of individual consumer, and not at those putting together a commercial fleet – and there’s a big difference between leasing a single vehicle and leasing a commercial fleet. But each of these ads “adds” to the noise that’s out there, so it’s no wonder that many prospective commercial fleet lessees feel that if they choose leasing, they’ll be taken for a ride – and not in the sense that we commercial fleet lessors like.
But all it really takes is just a little patience to get the hesitant to understand the advantages of commercial fleet leasing and soon they’ll be ready to lease. Congratulations – it’s a lessor! If they begin to waver at all, a simple reminder that leasing - more often than not - is better for a business’s cash flow and productivity, will keep them a convert to leasing. Nothing can shake their belief that they’ve made the right deci - - wait, what’s this? What are all these questions that now need to be answered: What type of vehicle? Options? Term of lease? Open end? Closed end? Upfitting? Remarketing?
Iceberg dead ahead! Continuing this bad mixed metaphor, does the new convert to leasing sink or swim? Do they lose their religion and go back to saying ‘amen’ to purchasing?
I have a life saver to throw them. And I’ll tell you about it in an upcoming post.
The opinions, findings, or perspectives expressed in this content are those of the author and do not reflect the official policy or position of The Bancorp, Inc., its affiliates, or its or their employees.