Leasing Is Still A Good Idea

Jan. 19, 2016

Changes to accounting standards recently unveiled by the Financial Accounting Standards Board (FASB) are causing fleets to take a closer look at the benefits of leasing.

The new standards were put in place to make financial reports easier to understand. Prior to the standards, most full-service leases were handled off the balance sheet and were accounted for as an expense on the income statement. The new standard changes that and says that all leases, including operating leases, have to be reported as assets and liabilities.

Being able to account for the lease off the balance sheet was just one of the things fleets found appealing about leasing trucks. But there are other factors to consider when deciding whether to lease or buy and some reasons why leasing is still an attractive option:

  1. Outsourcing both the asset ownership and service is more cost effective and easier to manage.
  2. New technologies have increased the complexity of maintaining trucks.
  3. The technician shortage makes it more difficult for fleets to find personnel to maintain their trucks.
  4. Fleets don’t need to put any money down and they get the immediate use of the asset vs. a loan, which typically requires a down payment.
  5. Fleets avoid using capital for a non-core business asset.
  6. Level fixed payments over the term that closely matches the useful life of the truck helps fleets budget.
  7. Disposal of the used truck is handled by the leasing company.

The new rules are not expected to go into effect until 2019 so there is still plenty of time to talk to your leasing company to see how the standards will impact your fleet and to discuss the other benefits of full-service leasing to decide if it makes sense for your business.

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