Leasing |
Company Ownership |
| Leasing is an efficient and economical method of vehicle acquisition and fleet administration for companies who need to conserve capital for their primary business. At Velcor, leasing keeps credit lines open, improves cash flow, and with the right lessor, provides the full services of an experienced leasing and management organization. |
Vehicle ownership requires a substantial investment in time, money, staff and equipment-costs which the lessor spreads over time and over many vehicles, thereby reducing overhead for its customers. For companies who prefer ownership, Velcor offers cost-controlling fleet management services to reduce administrative management of vehicles. |
| ADVANTAGES |
ADVANTAGES |
Financial
- No large cash outlays or downpayments
- Frees up funds for profit making investments
- Keep credit lines open for company growth
- Vehicle financing covers 100% of cost
- Off-balance sheet financing of vehicles
- Budgetable expense-predictable monthly cash flow
- Capital outlay is only for portion of vehicle used
- Choice of financing options and terms
- Availability of multiple financing sources
- One-time credit review-no need to reestablish credit
- No sales tax where use/rental tax applies
- Use tax paid in future dollars over term of lease
- Vehicles obtained at predetermined prices
- Lower costs through lessor's volume purchasing
Administration
- No separate purchasing and selling organization necessary
- One source supplier for vehicles, maintenance
- Full range of lease types and terms
- Unrestricted choice of makes and models
- Expertise in vehicle selection
- Wide variety of used car disposal methods
- Lessor handles record keeping and administration:
- Accounting and finance
- License, title, insurance compliance
- Manufacturer recall campaigns
- Federal, state, local tax administration
- Availability of other lessor services:
- Maintenance and repair costs control
- Extensive national account network
- Rental/pool car programs
- Emergency replacements
- Sophisticated data analysis and reports
- Universal fuel cards
- 100% pass through of factory fleet incentives
- Consolidated monthly billing
- Virtually no out-of-pocket driver expenses
- Control over corporate image
- Customized, flexible programs for every fleet
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Financial
- Depreciation available to purchaser
Administrative
- Control over image and suitability of vehicles
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| DISADVANTAGES |
DISADVANTAGES |
- Fleet locked in for a period of time
- Not advisable under certain tax situations
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Financial
- Requires cash outlay
- Requires outside financing/use of company credit lines
- Loss of profitable cash investment opportunities
- No volume purchasing power
- Vehicle capitalized on balance sheet
- Loan recognized on balance sheet
- Must manage loan portfolio
- 100% sales tax impact on purchase price
- Investment Tax Credits have been eliminated
- Depreciation write-offs have been curtailed
- Corporation now subject to Alternative Minimum Tax
Administrative
- No fleet management expertise
- Must maintain selling and purchasing division
- Requires extensive tracking and record keeping
- User owners computer space, time and personnel
- Administrative burden falls to owner:
- Vehicle "shopping" and price negotiations
- License, title, sales tax and insurance compliance
- Maintenance and repairs
- Warranty and extended warranty recovery
- Manufacturer recall campaigns
- Rental/pool emergency replacements
- Finance and accounting
- Limited vendor network for services
- Limited manufacturer fleet incentives and rebates
- Owner must monitor government laws and regulations
- Owner acts as used car salesman:
- Must handle negotiations, paperwork, and disposal
- Price haggling for direct sales to employees
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