Leases give certainty

13-08-2007 | Not Specified

When putting an operating lease package together, Hall says Macaulay Motors offers their clients a range of options from a number of lease companies.

"We do the hard work and the shopping around. That way we are able to put together an ownership or a lease package that fits the customer's requirements."

One of the advantages of an operating lease is that there is no capital outlay and no surprises at the end of the term.

Hall says a commonly asked question is what a vehicle will be worth in two or three year's time. Operating leases remove that uncertainty and make budgeting easy. The driver is always behind the wheel of a new vehicle that is under warranty.

In the case of new Ford and Mazda vehicles, the warranties are three-years or 100,000kms, whichever comes first.

Hall points out that some vehicles are more suited to leasing than others and the option is not for everyone.

Hall says the two main types of operating lease are a fully maintained operating lease and a non-maintained operating lease. No capital payments or deposits are paid and in both options the vehicle remains the property of the lease company.

Some liken this form of lease to renting the first three years of the life of the vehicle.

Paid monthly in advance, a fully maintained operating lease generally includes a provision for servicing, WOF, vehicle registration and tyres. These items are not included in the non-maintained option. For most leases the cost of vehicle insurance is the responsibility of the lessee. Any damage to the vehicle above what is deemed to be normal wear and tear is the lessee's responsibility and must be reimbursed to the lease company at the end of the lease.

One advantage of a fully maintained operating lease is that if the vehicle is off the road for any reason, such as for repairs, most lease companies will provide a relief vehicle for a period to ensure the wheels of the business keep turning.

As well as corporate and business clients, Hall says lease companies will lease vehicles to individuals for private use.

However regardless of the lease type, Hall says farmers pay the same lease cost as the electrician or plumber in town.

Whether buying or leasing a vehicle, Hall encourages clients to discuss with their accountant the purchase propositions and the issues relating to taxation, depreciation and cash flows.

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