Fleetcare Operating Lease
What is an operating lease?
An operating lease is an easy and cost effective way of financing your company’s vehicles. It’s a fully integrated, tax deductible, off-balance sheet leasing option that’s like a long-term vehicle rental. The two key benefits of an operating lease is that you carry no residual risk and can combine most vehicle running costs into one smooth, monthly payment.
Fleetcare owns the vehicle and provides you with exclusive use for one to five years in return for lease rental payments. At the end of the operating lease, you simply return the vehicle back to Fleetcare.
Why choose an operating lease?
It’s ‘off the balance sheet’
This type of financing doesn’t appear on your balance sheet, giving your business scope to improve performance ratios, such as return on assets, while preserving your company’s borrowing capacity.
It’s tax deductable
Leasing payments excluding the GST portion are usually tax deductible when the vehicle is used for business purposes, helping your bottom line. GST on monthly payments is claimed through your business activity statement (BAS) submission.
Eliminate residual and asset risk
With an operating lease, Fleetcare carries the risk of the residual value and vehicle disposal. At the end of the lease, you simply return the vehicle with no further obligations and upgrade to the latest model. There’s no outflow of cash reserves to buy assets, which will only depreciate, and the vehicles can be used for short or long periods of time, with no residual risk at any stage.
One fixed monthly payment
One fixed monthly maintenance and lease payment benefits your cash flow and makes budget forecasting more accurate, as well as protecting you against interest rate fluctuations. You’ll be able to accurately budget for the total costs associated with running your fleet. The monthly payment is delivered in a single invoice, making payment easy to manage.
An operating lease includes most vehicle running and maintenance costs, including servicing, registration/third party insurance, replacement tyres, roadside assistance, lease reporting and fines management, within a set monthly repayment. This can assist in your business cash flow, as you have flattened vehicle running costs that are known in advance.
Fleetcare can also supply and manage your fuel cards, e-tags and insurance, which are invoiced on a monthly basis as used.
Get in touch to see if an operating lease will work for your fleet.
Access working capital
Monthly repayments are spread over time so that you can keep your cash reserves for more effective use and maximise your key business performance indicators. You can also free up your company’s capital and internal resources to invest in your business, while Fleetcare takes care of your vehicles.
No deposit vehicle finance
100% of the vehicles cost is funded by Fleetcare. This means there is no initial deposit or outlay for your business.
Keep your fleet up to date
In our ever-changing world, vehicles are constantly being improved across all areas ranging from performance to safety. The ability to have the most current models can often be your competitive advantage.
The operating lease process
Fleetcare will assess your fleet requirements, taking into consideration your annual kilometres, and length of the lease to ensure an operating lease is the most affordable and functional fleet financing solution for your business. We strongly recommend that you also seek financial advice at this stage to ensure an operating lease is right for your business model.
Fleetcare will negotiate with our preferred dealer network to get you the best available vehicle price. We will then provide you a tailored quotation that matches the requirements of each vehicle in your fleet.
Fleetcare will ask you to complete a credit application. Once approved, a Master Facility Agreement will be set up with an approved credit limit. This allows you to draw down on the limit at any stage without the need to go through the credit process for each additional vehicle.
Our appointed dealer will be in contact with you regarding delivery of your new vehicle. At delivery you will also receive your new fuel cards & e-Tags to allow you to drive off with no hassles.
You will be allocated a dedicated Account Manager who will actively manage each vehicle you have financed with Fleetcare to ensure you minimise your vehicle costs. We will also provide you with in-depth reporting so that you can monitor your vehicles’ performance.
Prior to the end of your contract we will be in contact to arrange a replacement vehicle. Once your new vehicle is ready, you simply return the old vehicle to Fleetcare and pick up your new vehicle.
Operating lease FAQ
A. An operating lease is an ideal solution if your business wants to reduce fleet administration, doesn’t want to carry the residual value risk of an asset and wants to have the most current models by continually upgrading your vehicles.
A. No. In fact, an operating lease will do the complete opposite! Because an operating lease includes most vehicle running and maintenance costs managed by Fleetcare in one monthly repayment, Fleetcare will manage your paperwork for you, freeing up your time to focus on your business.
A. There are two main differences between these finance types, which revolve around risk and accounting. The choice to use either finance method depends on your business requirements.
Risk – Future Value: Under an Operating Lease, Fleetcare determines a future value based on the term and km’s travelled. At lease end Fleetcare retains the ownership and carries all the risk on the vehicle’s value. Under a Finance Lease the Australian Tax Office has guidelines to determine the required Residual Value. This Residual Value then becomes the amount that you pay at the lease end, so you are taking the risk on the vehicle.
Risk – Running Costs: An Operating Lease can include costs such as servicing, registration renewal, and replacement tyres. These are based on the term and km’s and are included in the fixed rental – that is Fleetcare carries the risk. A Finance Lease does not include running costs in the rental but these would be recharged on a monthly basis when required.
Accounting: Vehicles under Finance Lease are included as an asset to the company, whereas those under an Operating Lease are off balance sheet funding and don’t not show up on your balance sheet as asset or liability.
A. There is generally no minimum or maximum number of vehicles that can be leased but this will depend on your company’s financial position.
A. A Fully Maintained Operating Lease rental includes vehicle servicing, registration renewal, replacement tyres, roadside assistance, e-tag Management, accident management, fuel-card management and reporting. Under a Non-Maintained Operating Lease all running costs are charged back to you on a monthly basis – the lease rental covers the financing of the vehicle only.
A. Any new vehicle that is offered for sale by a Manufacturer approved dealer can be financed under an Operating Lease.
A. Fleetcare can buy back any current vehicles you have via a Sale & Leaseback. Once values and lease rentals are determined payment will be made as per our agreed arrangements.
A: Yes - Fleetcare purchases numerous vehicles on a weekly basis – we have a dedicated dealer network that we purchase through to ensure all discounts are passed onto you.
A. An operating lease term can range anywhere from 12 and 60 months.
A. Fleetcare will own the vehicle at the end of the lease.
A. Fleetcare will discuss end of lease options with you prior to the end of the contract – if you are interested in purchasing the financed vehicle, let us know so we can discuss the possibilities.
A. You can customise your vehicle any way that you like, as long as you let Fleetcare know what additional accessories or add-ons you want at the quote stage. This ensures that we can get the cheapest quote for you, which includes the pricing of the accessories and add-ons.