Fleet Financing | How-to Guides for running your business from Business.com

If your business makes deliveries, visits clients, or transports good and equipment between locations, then you need vehicles on site and ready to go. You can finance the purchase of a vehicle fleet of cars, minivans or trucks, or lease the vehicles instead, which avoids the capital expense of purchasing and can save you time and money in the long run. By financing or leasing a vehicle fleet, you can:

Pay someone else to maintain — or even refuel — the vehicles for you.
Quickly enlarge or reduce your fleet as needed.
Avoid the troubles that arise from employees using their own vehicles.

Action Steps
The best contacts and resources to help you get it done

Find the vehicles

Cars, trucks, hybrids -- you have a lot of vehicle choices available.

I recommend: Auto manufacturers (Ford, GM, Chrysler, Toyota, Honda, Nissan, Mazda, and more) all have fleet programs, but typically you need to buy or lease 5-10 vehicles to receive a fleet registration number, which gives you access to dealer incentive programs. The car rental company Enterprise also has a fleet program, which allows you to choose vehicles from multiple manufacturers.

Choose between buying and leasing

Your biggest fleet decision will be whether to purchase or lease vehicles. Weigh your vehicle needs (how many, what size, how far they'll travel, how they'll be used) and work with your accountant to determine which decision makes the most sense for your business. When you purchase, you have to choose between fixed or floating financing. Under a fixed-rate plan, your payments remain constant; with a floating-rate, your payments can fluctuate based on the health of the economy, but you can typically switch to a fixed rate. With leasing, you have a TRAC lease (which lets you buy the vehicle at lease end for a fixed price, paying the dealer the difference if you don't buy) or a walkaway lease (which lets you return the vehicle, extend the lease, or purchase the vehicle).

I recommend: Auto manufacturers have their own financing or lease programs, but you can also choose an independent firm, such as Commerical Fleet Financing, CFF, Midway Fleet, Primus Financial Services, or PHH Arval.

Outsource the maintenance

You could hire a mechanic and build a vehicle service center behind your factory, but that approach makes sense only if you have a huge fleet. For businesses with more modest fleets, consider hiring an outside company to service your vehicles.

I recommend: Fleet rental and sales companies typically offer a maintenance service that can be added to your contract. Enterprise, for example, has a network of 65,000 service centers

Hire a watchdog

You can do more than outsource the maintenance. By hiring a fleet management company, you can let them worry about maintenance schedules, vehicle misuse, and optimal driving routes.

I recommend: Fleet management companies -- such as GE Commercial Finance Fleet Services or Fleet Management Solutions -- can listen to your needs and determine what will work best for you. If you put someone on staff to manage your fleet, consider having that individual join the National Association of Fleet Administrators (NAFA) for discounts and advice. Fleet management software from FleetBoss, FleetCommander or Fleetmate is another possibility.

Fund the fuel

To pay for fuel, you can hand employees cash, reimburse employees, or use business credit or debit cards -- but those options can lead to trouble and messy accounting. Another possibility is a fleet fuel card.

I recommend: Wright Express, which works with fleet rental companies and independently, has a selection of fleet fuel cards that can be used at more than 180,000 locations. The cards can also be used for light fleet maintenance such as oil changes. You can review sales transaction data -- driver and vehicle ID, odometer reading, and more -- to analyze the effectiveness of your fleet. Fleet One, Global-Fleet, and U.S. Bank/Voyager also offer fleet fuel programs.

Bring the fuel to you

You can avoid using fleet fuel cards entirely if you have a refueling service that visits your business. Diesel refueling services are easier to find than gasoline ones.

I recommend: Fleet Fuel covers northern New Jersey and SC Fuels works in Southern California. If you happen to reside in the other 99% of the U.S., search the listings at DexKnows.com for "diesel" or "gasoline" providers in your area.

Tips & Tactics
Helpful advice for making the most of this Guide

Set up a separate line of credit if you purchase vehicles so that the purchase of depreciating assets doesn't use up existing lines of credit.
Consider paying employees for the use of their vehicles if you need transportation only occasionally.
Expect to pay more on insurance if you lease since the dealer still owns the vehicle and can demand a certain level of coverage.
Look for used vehicles, especially in bulk from rental companies, as an inexpensive alternative to leasing.
Ask about mileage limits while negotiating a lease. Driving over the limit can cost 15 to 20 cents per mile and can possibly make purchasing more affordable than leasing.

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