Benefits of Leasing vs. Buying

Leasing speaks to the bottom line. Its advantages over buying:

Conserve Cash: Companies buy revenue-producing assets with today’s dollars and pay for non-revenue producing leased cars and trucks through monthly, no-down-payment financing. Since vehicles are non-revenue producing assets, companies benefit by having surplus cash available for rolling back into the business to help ensure growth and profitability.

MACRS Tax Depreciation: A vehicle's write-off period under the 5 ½-year Modified Accelerated Cost Recovery System (MACRS) tax depreciation rarely matches actual depreciation. Companies working to accrue MACRS benefits often see operating costs go up and downtime expand as a result of not cycling vehicles properly.

Inflation: Regardless of the percentage, inflation favors leasing over ownership. Purchasing a vehicle requires a company to take real, current dollars out-of-pocket and pay for a depreciating asset. Leasing allows the depreciation value of a vehicle to go up as its economic life declines. Because inflationary dollars are less valuable than real dollars, the leased vehicle depreciates at a lower cost than a purchased one.

Sales Tax: A sales tax, due in full at the time of vehicle purchase, can dramatically impact a lease-versus-buy decision. In most states, leasing requires that only a rental tax be applied to monthly lease payments. Overpayment of sales tax is returned to the vehicle lessee when the sale of the vehicle produces a “gain.”

ARI’s competitive leasing program gives clients many distinct advantages:

Resales Made Easy: At the end of a lease, ARI sells leased vehicles for the highest price obtainable, issuing the client a check for any profits made. For 2004, our resale/residual value-per-used-vehicle was 20% higher than the industry average.

Ordering Ease: ARI streamlines the vehicle ordering process, beginning with vehicle selection. Working directly with clients, our experienced account representatives make recommendations based upon their specific needs, budget and bottom line. ARI’s web-based ordering process is the best in the business, enabling our clients to order vehicles simply, accurately and conveniently, and get immediate status updates online.

We offer clients many financing options as well:

Fixed Financing: The fixed rate is based on a spread relative to the applicable 2- or 3-year interest swap rate. ARI’s interest swap funding rates are based on the Federal Reserve Statistical Release H15. These are set on the first of each month for vehicles financed that same month.

Floating Financing:

Commercial Paper – based on the 30-day Commercial Paper Rate for High Grade Unsecured Notes published in The Wall Street Journal and set on the 25th of the month preceding the month billed.

LIBOR (London InterBank Offered Rate) – based on the one-month rate published in The Wall Street Journal and set on the 25th of the month preceding the month billed.

S.T.A.R. Financing (Steady Terms Adjustable Rate) – When a vehicle goes into service, the rate is fixed for billing purposes but is calculated for the duration of the lease based on either of the floating rates. At lease termination, any difference between paid and actual interest is billed or credited.