VEHICLE LEASING

EXPERT COMMENT: Vehicle Leasing the way to go for governments

Leasing gives the government an opportunity to trade out less efficient cars and take advantage of new and modern vehicles with new technology.

In Summary
  • Whether its owned or leased the older a vehicle gets, the costlier it becomes to maintain
  • Leases require little or no down payment
Kisumu county government newly purchased vehicles parked at the headquarters yard. . PICTURE FAITH MATETE
Kisumu county government newly purchased vehicles parked at the headquarters yard. . PICTURE FAITH MATETE

 

Vehicle leasing is the leasing of a motor vehicle for a fixed period of time at an agreed amount of money.

This is always offered by car dealers as an alternative to vehicle purchase. It is widely used by businesses as a method of acquiring vehicles for work without having the needed cash outlay for purchase.

From a management point of view, vehicle leasing by government, and to a larger extent in county governments, is very cost-effective.

This is because there is huge preservation of capital as it will cut government costs and spending which will lead to savings which may be channelled to priority projects.

In a lease agreement, the lessor insures the vehicles, ensures scheduled and unscheduled maintenance, replacement of non-functional vehicle and offers fleet management systems which reduce the challenge of grounded vehicles and cases of government employees using a vehicle for personal use.

Additionally, the greatest benefit of leasing a car is the lower out-of-pocket costs when acquiring and maintaining the car. Leases require little or no down payment, and there are no upfront sales tax charges.

Further, monthly payments are usually lower, and the government will get the pleasure of owning a new car every few years. Vehicle leasing will also help governments to reduce maintenance costs and fuel costs.

Whether it is owned or leased, the older a vehicle gets, the costlier it becomes to maintain.

Leasing gives the government an opportunity to trade out less efficient cars and take advantage of new and modern vehicles with new technology.

And finally, beyond removing fleet maintenance management responsibilities that come with vehicle ownership, leasing can also eliminate time-consuming administrative burdens.

 

For more efficient and cost-cutting approach, leasing stands out as opposed to outright vehicle purchase for government and if well executed it can save more money which can be used on pressing national needs.

Isaac Ndelema Wabuge, a leadership and governance expert talked to the Star.