Millions of companies around the world that employ a number of staff usually provide some of those staff members with a company car, either as a perk of the job or to facilitate their work. Sales representatives tend to travel on the road a lot and are hardly ever based at the office, so it makes sense for their employers to supply them with a car to use in connection with their work rather than using their own vehicles and increasing the wear and tear on them.
Company cars tend to be brand new or nearly-new, and although they give their employees some flexibility in the models that they want to drive, fleet managers will usually buy cars that are highly efficient on fuel; typically, this means cars will more often than not have diesel engines in them.
But one thing that I’ve often wondered about company cars is whether they buy their cars or lease them? I’ve worked for a few different employers in my time, and although some of them buy their own cars for fleet purposes, it seems that the majority of companies actually lease their cars.
Being an inquisitive nosey sort of person, I thought I’d investigate what makes fleet managers want to lease cars for their employees rather than buying them outright. Here is what I have managed to find out.
One of the major factors behind the decision to lease cars rather than buy them outright is the fact that fleet managers have an almost limitless choice of cars to choose from.
For example, one employee might want to have a small hatchback car such as the Audi A3 pictured above, yet another person may want an estate car from a different car manufacturer so that they comfortably and easily transport cargo around, such as to and from trade shows.
The money that a company needs to operate without entering into some kind of a financial crisis is called “cash flow”. Basically, just like individuals, companies need to have a certain amount of money in the bank so that it can pay for any expenses as and when they are required to do so.
According to the Premium Cars website, it says that an influencing factor behind the decision to lease or buy a car is the fact that leasing cars gives firms more flexibility with their cash flow because they can budget for lease payments each month, whereas buying cars outright means that they could potentially have minimal cash in the bank afterwards.
If a company buys a car, they generally have to keep it for several years to get their money’s worth out of it. Unfortunately, as all motorists know, the older a car becomes the higher the chance that they will have to pay for expensive repair bills.
When you a lease a car, you can typically include a service and maintenance package as part of the deal, so for the three or so years that you keep the car, you don’t have to pay any additional maintenance costs as everything is covered.