Your vehicles are the backbone of your business. You need them to make money, but first you need the money to acquire them. Those funds are hard to come by when your cash is required for other parts of your business. To avoid a big down payment and hefty monthly payments that tie up your capital, leasing is an ideal way to build your fleet. But you need to make sure you get the lease type, terms, rates and conditions that tightly align with your specific business goals and circumstances.
To figure out the right leases for your fleet, start by determining these parameters for your business:
Both lease types are viable for most situations. The goal is to figure out which one is best at fitting within your business parameters and minimizing your total cost of ownership. Before you can do that, you need to understand the basics of both leases.
In an open-end lease, you take on the vehicle’s depreciation risk. Your total cost of ownership isn’t known until the vehicle is remarketed.
The structure of an open-end lease includes a minimum term, typically 12 months. You can terminate the lease at any point after the term ends. When you do, you turn in the vehicle for resale and get the gain if the market value exceeds the residual value, or pay the difference if the market value is less.
To better fit your finance preferences, some companies, including Mike Albert Fleet Solutions, offer a choice of rates on open-end leases:
Open-end fixed rates:
Open-end floating rates:
Open-end leases may be right for your business if:
In a closed-end lease, the leasing company assumes the vehicle’s depreciation risk and responsibility for remarketing.
The structure of a closed-end lease has a set length, usually ranging from 12 months to 48 months, and comes with a fixed monthly payment and an annual mileage allotment. At the end of the lease you can simply return the vehicle and walk away, unless you owe fees for excess mileage or damage. You can also choose to extend the lease. Or, if you decide to take ownership of the vehicle, you can buy it at the residual value predetermined at the beginning of the lease.
There’s a common misperception that closed-end leases don’t offer flexibility in terms of mileage. But some lessors provide special options that account for high or varied mileage. Mike Albert offers two of these options:
Mileage credit program:
Unlimited mileage program:
Closed-end leases may be right for your business if:
Once you know your business parameters and the fundamentals of leasing, it’s time to partner with the right fleet leasing company. A lessor acting in your best interest won’t try to push a certain lease type on you. Instead, they’ll want to get a deep understanding of your specific operations and goals in order to customize a leasing strategy that works the hardest for your business and minimizes your total cost of ownership. They may even recommend a combination of lease types if you have varying vehicle needs and situations.
Mike Albert is a privately owned company, which gives us the freedom to offer you more flexible leasing and funding options, terms, rates and conditions. We don’t have a specific leasing agenda. Our goal is to maximize your cash flow and minimize your costs by working closely with you to tailor a financial plan that ensures you pay only for the portion of the vehicle you use. No more.
Most vehicle leases are configured to depreciate quickly in a straight line down to $0. But vehicles still have value at the end of their leases. That’s why Mike Albert matches your vehicle’s depreciation to the remaining book value at the end of the lease, saving you from overpayment. In fact, with matched depreciation, many of our clients have saved up to $150 a month per vehicle.
At Mike Albert, you can sell your aging fleet vehicles to us at market value and lease them back with efficient financing. Why? So you can: