Fleet Leasing Vs. Car Allowance: Which is Best for Your Business?

In 2023 there are companies all over Ontario that are beginning to scale their businesses and grow their need for commercial vehicles. For businesses making this leap, it's important to ensure you get the best return on your investment. And so comes the age-old question that most enterprises will eventually face: What is the best way to acquire my fleet?

Many businesses are under the impression that providing their employees with a car allowance is the most efficient and cost-effective approach. With a car allowance model, a company typically decides on a reimbursement rate per mile or per month for employee travel. Companies often use a fixed mileage rate, a monthly rate, or a combination of a fixed monthly allowance with mileage reimbursement.

The truth is, there are numerous advantages to building your own commercial fleet over choosing a car allowance model, from preserving your bottom line to reduced liability. In this article, we’ll explore fleet leasing versus car allowances and help you determine which option is best for your business.

Time is Money

When utilizing a car allowance model, reimbursement rates vary. If you do not provide company vehicles, each employee is responsible for keeping their vehicle properly insured, maintained, and registered for business use. As you can imagine, car allowance management can take up a lot of time that could be better spent on more important business operations. Not only does a fleet service provider like Quest Auto Leasing provide you with a wide selection of vehicles, but you also have access to a broad range of fleet management solutions that can save you time and money.

Recruitment Advantage

A good business owner knows that their business is only as good as the people they employ. Using the car allowance model can significantly reduce your hiring pool, and by requiring drivers to use their own vehicle at work, you could be excluding loads of potential great hires. Potential employees see a company car as a valuable benefit, like healthcare coverage or profit-sharing. A company vehicle can be the competitive advantage you need to attract the right talent before your competitors do.

Reduced Liability

With optimized fleet solutions, company vehicles can ensure your drivers’ safety and protect your business from potential liability. Through accurate and actionable data extracted from intuitive telematics, a fleet service provider can help ensure safety and enhance productivity by enabling fleets to understand vehicle location, your drivers’ on-road performance, and other fleet activities. Not to mention, vehicles that have been upfitted according to your business’ specifications and requirements make employee training much more efficient.

In conclusion, a car allowance model is typically a low mileage solution and can be cost-effective if your employees keep travel to a minimum. But for businesses that require employees to travel more frequently, building a company fleet makes the most sense economically.

With over 40 years of experience helping businesses and individuals from across the Greater Toronto Area, we’re poised to meet the vehicle leasing needs of your business or family. Let us know how Quest Automotive Leasing can best serve you, and one of our friendly leasing specialists will reach out to set up a free consultation.