The financing period and monthly
instalment are fixed which can be a big
advantage in an uncertain economy
and also allow for easier budgeting and
control.
While an instalment sale has always
been very popular it does also come
with some disadvantages. As owner-
ship is only transferred once the final
payment is made, vehicles cannot be
disposed of at the owner’s discretion
until the loan amount is settled, however
the risk of the residual value still resides
with the user.
Leasing
In recent years leasing has grown in
popularity as it affords operators the
use of vehicles without the need to own
them. Without having to invest large
amounts in vehicles companies can gain
access to the equipment needed to
meet increased demand, with agree-
ments tailored to their exact needs and
usage requirements.
Full maintenance leasing
Extended leasing agreements, which
very often include maintenance and
insurance are now a popular way of add-
ing vehicles to fleets as it consolidates a
number of expenses relating to vehicles
into one payment. However very often
these agreements, especially when
maintenance is included, will stipulate
maximum usage and it is therefore
imperative to do your homework in
order to determine if this suits the needs
of your business. In many cases there is
a sweet spot, so if your usage is below
that you will be paying for something
that you don’t need or alternatively you
could be penalised for excessive use.
It is important to keep in mind that
no matter which method you choose
it will have an effect on your operating
costs, tax payments and ultimately your
profits, so it is vital to educate yourself,
if necessary with the help of expert
consultants, on the various options
available and do the due diligence in
determining which is the best solution
for your business.
“The various options all have their
advantages and disadvantages but it
is clear that there is no such thing as a
once size fits all solution and in many
cases larger operators will finance their
vehicles using a combination of these
options depending on their current
needs or financial situation,” concludes
de Vries. BFA
October 2022 | BUSINESS FLEET AFRICA
WWW.BUSINESSFLEETAFRICA.CO.ZA
“The various options all
have their advantages
and disadvantages but
it is clear that there is
no such thing as a once
size fits all solution and
in many cases larger
operators will finance
their vehicles using a
combination of these
options depending on
their current needs or
financial situation.”
– Derick de Vries,
Executive Head of
Standard Bank Fleet
Management