What Is An Operating Lease & how Does It Work?

For many organisations and government departments, operating leases offer a popular funding choice for their lease requirements. This type of lease allows them to fund a range of assets such as cars or vans without the need to purchase the vehicle when the term of the lease finishes.

When Toyota Fleet Management provide this type of lease, we retain ownership of the vehicle over the complete lease period. This structure means there is no capital outlay. You choose the term of the lease and estimate the number of kilometres you believe you will travel each year; we then establish the operating lease with a set monthly cost to your business.

This is a stress-free lease option; in essence it is like borrowing the car for an agreed period of time, you have the full use of the vehicle of your choice without the stress of purchase.  At the end of the lease period, you return the vehicle to Toyota Fleet Management in condition aligned with the fair wear and tear guidelines in our agreement, and the lease ends. There are no residual payments which makes the whole process painless.

If you are planning to use the leased vehicle primarily for business purposes then an operating lease is ideal. The structure suits a wide range of sole traders and companies of any size, it is particularly attractive when you expect to cover a high number of kilometres.

The TFM lease agreement will clearly outline the full terms of the transaction and the period it covers.

Benefits of an operating lease include:

  • Payments associated with the lease are made over a fixed lease term i.e., the lease period
  • Payments made are all tax deductible
  • No capital outlay is required
  • You don’t own the vehicle, so risk is reduced
  • For fully maintained operating lease structures, we take care of the maintenance of the vehicle as part of the monthly fee.

In summary

When you need to free up cashflow and minimise capital outlay an operating lease is a sound choice. As you know what your costs will be each month for the duration of the lease, budgeting and management are easier. We send you a single monthly invoice covering the rental, maintenance and running costs.

At the end of the lease period, you also have the option to purchase the vehicle rather than send it back to TFM. You may also decide to extend the lease on the current vehicle or update to a new vehicle, the choice is yours. At Toyota Fleet Management we work hard to provide you with options that make managing your fleet as painless as possible.

If you think an operating lease sounds like it could be the solution for your business, find out more about the options available from Toyota Fleet Management