January 3, 2019
Small Business

Best way to build a fleet of vehicles

Knowing how to build your small fleet business properly is the only way it will become a success. This success will rely on providing the best possible service to your clients so they can rely on you to be dependable while expanding your commercial motor fleet.

Best way to build a fleet of vehicles

For the small business owner, the purchase of new vehicle can be an overwhelming financial challenge. Because of that there are up to 4 paths that can be followed in adding to your fleet.

  • Contract Hire vehicles are a fast way to grow a fleet. What must be remembered is the business never owns the vehicles and the contractors drivers can depart at the end of their term if they so desire.
  • Finance Lease makes it possible to expand the number of vehicle in the fleet without a huge investment. The down side is the monthly installments required to keep the vehicles in your fleet.
  • Finance Lease Purchase that is similar to finance lease but with the additional option to purchase the vehicles at the end of the contract. To help keep the operating costs at a minimum in the beginning, a balloon payment at the end of the contract can be arranged. This allows for the business to own the vehicles after years of being successful so they can afford to make the purchase.
  • Contract Purchase requires either strong financial backing or great credit to secure the funds or loan to buy the vehicles needed for fleet expansion. 

To help the small fleet business owners expand, many dealers and manufacturers of vehicle provide multiple financial options to fit their needs.

Before making the purchase or leasing of a vehicle what should be considered?

  • 1
    When vehicles are purchased, the owner is responsible for the maintenance and upkeep of the vehicle. When leasing a vehicle, the dealer is responsible for the upkeep of the vehicle.
  • 2
    When leasing the amount spent in payments is most of the time tax deductable while payments for ownership are not always tax deductable.
  • 3
    In leasing contracts there is generally a mileage limit the vehicle cannot exceed.  When purchasing a vehicle there is no mileage limit.
  • 4
    When purchasing a vehicle the business is acquiring capital which increases the value of the business. When leasing vehicles, no capital is gained by the business.
  • 5
    When purchasing a vehicle, it is considered an asset and can be sold. When leasing all the money spent on the lease is like rent. Once the contract is over, the vehicle is gone with no revenue going to the business.

The way a fleet business owner decides on how to build a business fleet is generally decided on by their financial situation. Leasing is less expensive but purchasing acquires capital. Choose the path that would be most beneficial in terms taxes and goals so you will stay out of trouble with the government and still see progress.

The best way to build your small fleet business is to do it slowly over time by adding one to three new vehicles to the fleet each year until you obtain the size you need. This makes it possible for your client base to grow in an orderly fashion and makes it possible for you to provide consistent and dependable delivery business.


Eamonn Turley

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