Commercial vehicle rental or leasing?

Of course there are exceptions but most of the cases companies do not pay the full price of the vehicle in cash, but they use some kind of financial construction. Nowadays there a lot of financial solutions to choose from so it is beneficial to be aware of the main characteristics and advantages.

Occupational Lease

Occupational lease can be recommended for those who do not want to get ownership of the vehicle after the lease period. After the lease term, the ownership will stay at the lessor’s hand. The term of the lease period is between 12-60 months.

Benefits of occupational lease :

  • The leasing fees can be fully accounted for cost so it has a tax-base reduction effect.
  • The leasing asset is an off-balance item so it will spare the company’s investment framework.

Open-end lease

In case of open-end lease the purchase of assets are feasible with minimal initial capital because the VAT payment is distributed over the full term. During the leasing period the ownership belongs to the lessor, but appears in the lessee’s book so the depreciation will be accounted by the lessee. After the leasing period the lessee can decide whether to use the pre-emption right to purchase the vehicle based on the salvage value fixed in the contract or the lessee uses the right of nomination a buyer and directly sells the vehicle at salvage value or gives the asset back to the lessor. The duration of the leasing is 12-60 months.

Benefits of open-end lease :

  • The VAT of the purchasing price should not be paid at the beginning of the leasing, but during the leasing period.
  • If the lessee uses the right of pre-emption it will be able to purchase the asset by paying the salvage value.

Closed-end lease

During the leasing period the ownership belongs to the lessor, but appears in the lessee’s book so the depreciation will be accounted by the lessee. The lessee will automatically get the ownership of the asset after paying the last leasing fee. It is recommended for those who would like to use the asset after the leasing period as well. The VAT has to be paid at the beginning of the term and fully reclaimable. The duration of the leasing is 12-60 months.

Benefits of closed-end lease:

  • The ownership of the asset will belong to the lessee without paying the salvage value at the end of the leasing period.
  • The tax liabilities and reclaims due at the beginning of the leasing period.

The 3 options in case of open-end lease might raise some problems to consider. To reduce the risk from the lessor’s side, the salvage value are usually below the real market value. So it is better not to give the ownership to the lessor after the leasing period. In case of the third option, the nominated buyer will purchase the asset at the salvage value what is substantially lower than the real market value. However, products can only change owner at real market value. Otherwise the tax authority might penalise due to tax evasion.

Conversely, in case of rental there are no problems with financial, accounting and taxation methods. Rental has a lot of benefits for the customers. Via Bérautó ensures that in case of malfunctions the reparing or the replacement car will be done as soon as possible furthermore a European assistance network is also available. Via Bérautó provides opportunity for even 1 day long or 3 or more year long rental periods so seasonal activities can also be done easily with the flexibility of Via Bérautó.

The rental involves all the administration works so customers can save money and time, the rental fees involve the insurance,tyres, maintenance and reparation so it makes it very plannable what minimazes the financial risks. Rental periods over a year make possible to always use the proper vehicle for the actual freight activities what increases the efficiency of the customer. Moreover, this can be done without huge capital investments. Because of the strict credit assessment, most of the cases rental is the only way to get new vehicles for newly founded companies. Beside these, Via Bérautó provides the rental vehicles with modern telematic assets so continuous assessment of the performance of the driver and the vehicle are very easy what can boost the economic operation. Moreover, in case of long term rental we let the vehicle with the decoration the customer prefers.

Beside rental, we are able to solve any request, included leasing constructions, based on our relationships with financial institutions.

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