OUTRIGHT PURCHASE

LOAN / FINANCE LEASE

OPERATING LEASE

·   Pay outright and own

·   Claim depreciation

·   Internally manage the fleet:

o Acquisition

o Registration

o Insurance

o Damage repairs

o Dealing with suppliers

o Authorising and paying suppliers

o Reselling the car etc

·   Co. takes all the risks on the car

·   Borrow money from Bank/FI to buy the car

·   Repay the whole principal & interest thereon

·   Book treatment and other management same as outright purchase.

·   At the end of tenure/early termination, company has to prepay the foreclosure amount

·   Company is stuck with the car

·   Co. takes all the risks on the car

·      Most common method for company cars used by corporates in Europe and in other mature vehicle markets

·      Just outsource the whole vehicle acquisition, management and resale process

·      Just pay a fixed monthly cost for using a particular vehicle

·      All risks relating to maintenance overspend and losses on resale risks to be borne by the leasing company.

·      Just paying for the depreciation (loss in value) expected on the use of the car over the lease period.