Fleet leasing is not new to South Africa, but the challenging post-pandemic economy has led to a notable increase in the need for lease options that suit the budget requirements of companies and individuals alike.
A vehicle, or a fleet of vehicles, is still one of the biggest expenses for any individual or company in South Africa. The vehicle price is merely a part of it while maintenance, service, repair and fuel are consistent - and often increasing - costs that owners must be able to pay in order to keep their vehicles running.
This article in CAR magazine highlights the pros and cons of individual leasing, mentioning that,
“For those with no interest in owning a depreciating asset and enjoy driving the latest models at a fixed monthly cost, private vehicle leasing is an attractive option.”
If you look at the above statement from a company perspective, it boils down to the same thing: companies do not want to own depreciating assets and they must ensure they always have the best vehicles for their specific fleet purposes.
A tailored fleet leasing option is currently the best solution for any business, no matter the size or purpose of the fleet.
Why fleet vehicle leasing makes sense
In an economy where the phrase ‘risk reduction’ has become more important than ever, choosing a fleet lease option is the most sensible route. Businesses that own their fleet vehicles miss out on cost-saving lease options, such as:
1. A tailored lease agreement
While there are many vehicle financing options, ownership still places all the financial risk on the company balance sheet. A tailored lease option, however, removes that risk from your business and there are many more ways to structure vehicle lease agreements than vehicle financing. This allows businesses to improve their fleet operations, but lower their fleet running costs.
2. Expertise, expertise, expertise
No matter what business you run, your customers come to you for a reason: for your expertise in your field, excellent customer service, and the ability to meet specific customer needs.
The same applies to fleet management: if you enter into a fleet lease agreement with a company that specialises in this field, you will reap the benefits, such as:
- Ensuring your vehicles are 100% fit for purpose
- Minimal downtime
- Reduce risk of breakdowns or vehicle incidents
- Expert advice on when to defleet current vehicles and replace existing fleet vehicles - including all of the research, negotiating and admin this entails
- Lower fleet running costs, but a fleet that operates at 100%
3. A sleek operation
Every aspect of your business reflects on the reputation of your company, including your fleet operations. A well-managed lease fleet reduces the risk of delays and ensures your business is never conducted with poorly maintained vehicles.
Eqstra’s full maintenance lease option keeps everything running smoothly by taking care of all the essentials of an optimised fleet. For example:
- Maintenance, servicing and tyre replacements are all included in the monthly lease
- Greater insight into your fleet performance with regular reports on all key areas such as fleet and fuel costs, contract utilisation, speeding, frequency of incidents and traffic offences
- 24-hour service from a wide network of suppliers
- Full financial reporting
- Lease payments are tax deductible in accordance with IFRS16
These points are just a few examples of how a lease option allows your fleet to support your core business, instead of draining the company in the form of resources and unexpected costs.
4. The freedom to plan ahead
By leasing your fleet, instead of owning the vehicles, your business is able to work with a much clearer picture of your monthly/annual fleet costs. With services such as vehicle and tyre maintenance worked into the lease agreement, all of these expenses can be calculated ahead of time.
This allows you to allocate a specific cost to your fleet operations and know that the risk of unexpected costs is kept to a minimum.
5. Best possible rates
A lease agreement with Eqstra gives you instant access to preferential rates in many areas from vehicle servicing to repairs and tyre management, to name only a few.
These cost savings all add up and will keep boosting your company's balance sheet.
6. Tailor-made
It’s worth mentioning again: with a fleet lease agreement you can tailor a solution that suits your current business needs. You can keep it flexible, set it up to grow as your business expands, or downsize when needed.
Fleet vehicle lease options are much easier to structure to each unique business than ownership financing, which gives your company a lot more room to grow or change without being encumbered by a dated and expensive fleet.
Summary
There’s no arguing that current economic challenges are turning into a marathon, but it has resulted in an unprecedented variety in vehicle lease options in South Africa.
A tailored fleet vehicle lease agreement could be exactly what your business needs to free up resources and cash flow, so it’s a great time to find out more and see whether leasing is the right solution for you.
Visit our fleet leasing page for answers to the most common leasing FAQs and for more information on why leasing could be the perfect solution for your business.