Why Lease a GPS Fleet Tracking System?
It might seem like a better idea to just buy a GPS fleet tracking system as opposed to leasing one, since you own the equipment, but there are several benefits to leasing a system. For one, the upfront cost is significantly lower, making costly systems more attainable. If yours is a small or growing business, this can significantly improve the quality of equipment you’re able to buy.
Leasing also gets you the latest in GPS innovation, as many suppliers will upgrade your system as technology improves. Finally, although the equipment does not belong to you, neither do maintenance responsibilities; the company takes care of all of that for you.
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Types of Fleet Tracking Leases
There are two main types of lease available: finance leases and operating leases.
In a finance lease, also referred to as a capital lease, the lessor (the company you lease from) owns the equipment while the lessee (you) reports the lease itself as an asset. This increases your business’s holdings as well as your liability.
Typically used by larger companies, finance leases come with the advantage of being able to claim the depreciation tax credit on the equipment and the expense of the lease itself. The lessee also has the option of purchasing the equipment at the end of the leasing period. The APR for a finance lease tends to be higher than operating leases, with interest rates averaging between 6 and 9 percent. Contracts are generally for between 24 and 72 months.
In an operating lease, the lessor still owns the equipment, but the lessee cannot list it as capital. Instead, it is claimed as a rental expense. This means that the equipment is not recorded as an asset or a liability, but still qualifies for tax incentives. As always, talk to your accountant to be sure.
Interest rates for operating leases vary widely, but most fall around 5 percent or lower. Contracts for operating leases generally last between 12 and 36 months.
How Much Does Leasing a GPS Fleet Tracking System Cost?
The cost of leasing a GPS fleet tracking system varies depending on the type of system you choose, the type of lease you choose, and the GPS service company you lease through. That being said, here is a general pricing guide so as to provide an idea of what you can expect to spend to lease a GPS fleet tracking system:
- On average, the cost to lease a GPS fleet tracking system is around $18 per month for an entry level unit
- Costs increase to between $30 and $65 per month for more sophisticated systems
- Installation for the system has an average cost of $100
- Maintenance and software updates may have an additional cost between $20 and $25 per month
Savings When You Lease
Leasing a GPS fleet tracking system is a great way to improve the overall operations of your business while saving some money. When employees know they are being monitored, they tend to drive safer, reducing overall accidents or incidents on the job. In addition to that, GPS systems allow you to set up the best possible routes, lowering fuel consumption and overtime costs. But the lease itself can offer savings as well.
Many people think of a lease as something that saves you money upfront, but costs you more in the long run. Often, this is true. However, leasing is also a great way for you to afford better equipment with a lower upfront cost. Choosing to lease your GPS fleet tracking system gives you access to a whole new range of products that may have been outside your price range previously.