5 Key Benefits of Leasing vs. Buying Your Fleet Vehicles
The two biggest components of any FedEx route business are its people and its vehicles.
If you are considering becoming a FedEx contractor, building a safe and reliable vehicle fleet is just as important as hiring a team of qualified drivers—but is it better to buy or lease the delivery vehicles you will need to run an efficient route business?
To answer this question, it helps to first think about the type of business you want to run. Will it be a small P&D enterprise with just a handful of local routes, or do you have your sights set on a more expansive customer service area? Then again, you may be interested in purchasing linehaul routes.
As you work with a FedEx broker to research available routes and find the best options, making sure you have the right vehicles for the job is critical.
Here are 5 key reasons why leasing may be the better option.
- More financial flexibility.
Unlike purchasing a vehicle, leasing involves fewer upfront costs.
For example, you should not have to worry about coming up with a large down payment, and typically there are no additional taxes and fees to pay. As a result, contractors can keep more money in their pocket and can use that money toward growing and scaling their business. Monthly lease payments are also generally lower than traditional vehicle loan payments.
- Highly customizable.
This refers to both the lease and the vehicles. In most cases, lease agreement terms can be tailored to fit the needs of the individual business, so there is a lot more flexibility to get exactly the terms you want.
Contractors are also able to choose the specific vehicle attributes they want or need, such as the latest safety and technology features or additional features to ensure driver comfort.
- Less time and money on maintenance.
With leased vehicles, all maintenance and repairs are handled by the leasing company; this is helpful for two reasons.
First, it saves contractors a considerable amount of time that would otherwise be spent scheduling routine maintenance, finding a qualified mechanic for necessary repairs, and/or handling issues such as flat tires or breakdowns (which often require towing).
Second, and this applies to larger operations especially, leasing eliminates the need to hire a qualified maintenance and repair crew—something that is not only costly but often requires space for a maintenance shop within your business location.
- Newer vehicles are a big hiring incentive.
Delivery driver turnover rates are historically high when compared to those for other jobs in other industries, which means finding and retaining qualified, reliable drivers can be difficult. Leasing allows contractors to provide new, state-of-the-art vehicles with the latest technology, safety features, and even driver comfort add-ons to make working for your route business more attractive to potential and existing drivers.
- Leasing makes your delivery business more reliable.
Leasing is a smart choice for FedEx route businesses because leased trucks and vans are less likely to have issues that would impact your delivery schedules. This is especially important during peak season, when a vehicle malfunction or breakdown could be extremely costly.
And, because leased vehicles are newer and most commercial leases are between three and five years, there will be less overall wear and tear on your vehicles while you have them. This also helps to ensure on-time deliveries and happy customers, which is ultimately better for your business.
KR Capital has been helping FedEx contractors succeed for 10 years.
As the nation’s leading FedEx brokerage firm, KR Capital has helped hundreds of contractors obtain the information and resources necessary to purchase, own, manage, and—when the time comes—sell their routes in the simplest and most profitable way possible. Call us today at (503) 664-0753 or fill out our online form to hear back from us shortly.