Should I rent or purchase my vehicle trackers?
So, your company is ready to jump in to the world of business vehicle tracking? Perhaps you are looking to improve your existing service? It’s very easy to understand the huge benefits tracking brings to companies, from incredible cost reduction, improved safety or excellent productivity. However it is not always easy to understand the best way to pay for your service.
Here we look at some options, pros and cons to each and hopefully help you decide which best suits your business and your individual requirements. Every business is different so please take time when considering what’s best and if necessary, consult professional financial advice.
The payment options in the vehicle tracking world vary from company to company; however they generally fall under three categories: outright purchase, rental and leasing.
Outright purchase of a tracking system
Some would say that purchasing your tracking equipment outright is the easiest option. There is less paperwork than leasing, for example, and lease companies will often ask for quite detailed financial information about your business. They may also ask how the equipment is to be deployed across your company with reassurances on condition. On top of this, purchased equipment offers tax advantages in that it is usually deductible in the year of purchase.
Purchasing your tracking equipment is the easiest method to understand – you buy your kit at an agreed price and own it for as long as you wish.
When purchasing your vehicle tracking device, many people view buying small consumable tech equipment as a bad idea due to the short shelf life of the products. Although some systems can be upgraded, often remotely, it has long been considered that tech equipment is subject to constant improvement and development.
When buying tracking devices one of the drawback is that your equipment is ‘out of date’ in a reasonably short period of time, when compared with the latest releases or technology in the sector.
If you have purchased your hardware and suddenly wish to take advantage of a recently released feature in the market, your only option is to buy the new kit again.
Another thing to consider is cash flow – it may not suit your business to tie up cash in hardware which will depreciate swiftly over the period you use it.
Leasing vehicle tracking equipment
With some leases you pay nothing up-front easing cash-flow within your company. In most cases there are fixed monthly costs for your equipment. Another benefit of leasing is your equipment will always be up to date. As an example, if you were to lease your tech purchases over say a three-year period, once the period has finished, you are then free to start a lease on something completely different and upgrade all your kit.
By spreading the costs with leasing, you may also be able to afford something more than a purchase – giving you a competitive edge and allowing your business to thrive quicker over a short period.
You’re in it for the long run! Well, at least as long as you take a lease out for. If you take a lease for say three or five years, you may still be paying for equipment long after you have stopped using it. If you decide you wish to upgrade to new equipment two and a half years in to a five year lease, you will almost certainly have to either extend your lease period considerably, increase your payments by quite a margin or possibly both. In most cases, leasing will cost you far more than purchase or rental.
Renting vehicle tracking equipment
Some would claim that renting small tech equipment sits somewhere in between purchase and leasing. It has many benefits of both and little downside.
Firstly, it carries the initial financial benefits of leasing but without the long term commitment. Many companies will offer rental of tracking equipment over a shorter period, say one year, rather than the three or five years offered on leasing. This means that you can deploy the technology you wish straight away without an initial large financial outlay and also without committing to the solution for many years.
It also gives you a very simple process in that the company you rent from takes much of the risk. They pay all costs to get the tracking kit from manufacturing to implementation and you simply pay a rental charge to them to use the kit. When you’re finished with it, you either hand it back to the company at no additional cost or you upgrade it to the latest technology and in most circumstances, this is done at no additional cost per month.
Renting your vehicle tracking equipment allows you to remain completely flexible with no long term commitments, which with recent financial instability across the world, is no bad thing.
Not many challenges with rental – the main one we can think of is that if you rent the same equipment for a long period of time, it will cost you more than if you purchased it. That said, most people who rent do it so they can keep everything very flexible and upgrade easily when the technology dictates or when they simply wish for a change.
Overall the decision must be based on your individual needs as a business. We would only encourage companies to consider their own positions, what is financially beneficial for them and to plan carefully for purchasing any tech equipment – it may well be obsolete way before you have finished paying for it.
The Track King™ team is available to assist you with your choice – so please get in touch to see if we can help you.