CONSIDER YOUR OPTIONS
REIMBURSEMENT VS. LEASING
The question persists: should you lease company vehicles or reimburse drivers for use of their personal vehicles? From a pure cost standpoint, the answer is clear: it’s almost always more economical to lease rather than reimburse at the federal rate. The current IRS reimbursement rate is 57.5 cents per mile. The operating cost is significantly lower for leased vehicles when including all fixed and variable expenses.
| REIMBURSEMENT | LEASE |
|---|---|
| Lack of control with company image based upon employee selection of vehicle make, model, age, condition | Full control of vehicle selector ensuring proper company image and specification |
| Increased expense due to employee over-statement of business mileage | Reduced expense from overstating mileage |
| Drivers purchase vehicles at higher retail prices vs. fleet pricing | Lower acquisition cost through commercial incentives and rebates |
| Employees responsible for all vehicle maintenance and repair | Professionally administered maintenance program ensures safety |
| Potential risk of inadequate insurance limits or lapse of coverage | Formal insurance compliance and monitoring program |
| Insurance premiums are higher for employees due to business usage | Corporate insurance provides proper coverage and fairness across all drivers |
| Safety and reliability may be compromised due to outdated vehicles | Scheduled replacement cycle prevents outdated and unsafe vehicles |
| Vehicles are kept longer resulting in higher operating cost and downtime | Regularly maintained vehicles improve operating efficiency & eliminate downtime |
| Hiring disadvantage or employee retention without company vehicle program | Leased vehicles create a hiring advantage and promote employee retention |