The True Costs of Business Vehicle Leases

Maintaining your own fleet of leased vehicles may seem like a clever solution to many of the problems inherent to handling business transportation administration and expenses, but beware—that business vehicle lease may turn out a lot more expensive in practice than it seems on paper. There are hidden costs inherent to any business expenditure, but few surpass a business vehicle lease in terms of bulk below the water—so watch out for these icebergs, lest they sink your company’s profits into the red.

1. Loss of flexibility. Compared to many other options, you’ll find you lose a lot of flexibility with a business vehicle lease program; you won’t be able to adapt your fleet to evolving situations; if you need to change the makeup of your fleet, or cut your fleet, or upgrade to newer models on a short timeline, all will be difficult if not impossible with a lease—you’re on the hook for those vehicles, even if you’d rather be rid of them in favor of something else.

2. Fleet maintenance and administration. Leasing or not, you’re faced with a mountain of maintenance expenses, administrative overhead, and other concerns when you maintain a fleet. Depending on the specifics of how you lease—whether you’re leasing an entire fleet and the appropriate management team and maintenance, or individual vehicles—you might avoid some of these expenses, but you won’t avoid all of them. You simply can’t avoid overhead with a fleet, even if it’s just keeping track of the lease or leases.

3. Liability. Leased vehicles, and the actions of their drivers, are as much your responsibility as they would be with a company-owned fleet. If you need to let drivers take their vehicles home, then you’re suddenly on the hook for errors they make 24/7, on or off the clock. That’s a lot of potential liability coming your way—not to mention the fact that those off-the-clock hours are also adding to the overall maintenance costs of your fleet.

4. Insurance. Liability means you’re on the hook for anything that goes wrong, at any time—and that in turn means that you can look forward to spending more on your transportation insurance policies than you would with a solution like a vehicle reimbursement policy. You might end up paying even more than you’d expect, as the terms of your business vehicle lease might include rather stringent insurance standards—more than you need, at a higher price than you can justify.

5. Morale. Perhaps the biggest hidden cost of all, the loss of morale involved when you put drivers behind the wheel of leased vehicles cannot be underestimated. It’s bad enough when you force them to drive company-owned vehicles instead of their preferred personal vehicles; leased vehicles carry even more restrictions, even less flexibility, and even more headaches. You’ll come out far ahead on morale and profitability with alternative transportation solutions, such as a flexible vehicle reimbursement strategy.

Looking to learn more about alternatives to the costs hidden in a business vehicle lease transportation strategy? Browse the CarData Learning Center, or arrange to speak with one of our experts on potential solutions for your business.