What is Full Service Leasing?

There are a number of both myths and facts associated with long-term lease. We will try to show you what information falls into which category.

Facts

• Contrary to financial leasing, which helps you acquire a car but leaves the maintenance and administration up to you, the full-service operational leasing will free you from such exasperation - the company offering operational leasing services will arrange all these things for you.
  
  Having taken the advantage of our services, you will get rid of paperwork associated with your car fleet management. You won't have to arrange car registration, servicing, insurance … and you will do your job.

• No capital engagement
  In comparison with purchasing vehicles or leasing them with an initial payment, FSL allows avoiding a vast majority of expenses and spreading them over time, greatly improving the company’s liquidity. We also offer sale and lease back services for existing fleets, further freeing frozen capital.

1st Myth

Many Fleet Managers think along these lines: “After introducing FSL, my post will no longer be needed and I will loose my job”. In reality, it works rather differently.

Facts

Managers who experienced the transition to FSL started being perceived as dynamic and change-inducing, and that their position at work became more pronounced.

At the same time, their responsibilities changed:
From:

• day-to-day actions aimed at keeping the fleet fully operational,
• performing basic administration,
• scheduling technical check ups,
• analysing invoices,
• entering them into the company’s system,
• delivering cars to end users,
• acting as a one-person 24/7 call centre.

To:
managing the performance of the FSL agreement, by:

• performing a quarterly analysis of the Service Level Agreement document and proposing changes if needed,
• maximising employee safety – by analysing accident causes and introducing additional training,
• monitoring and minimising petrol costs (setting mileage, different routes, monitoring individual indices),
• introducing programmes maximising the cars’ residual value, later allowing its employees to buy them after the lease period,
• controlling the employee’s effectiveness (GPS),
• co-operation with the company’s sales department,
• monitoring excess costs and targeting their sources,
• budgeting expenses (set instalment).

2nd Myth

Long-term lease is more expensive than using self-owned cars – why shouldn’t we use cheaper solutions?

That’s not true!

Facts

Let us perform a simple real cost analysis, based on the concept of DCF – Discounted Cash Flow. It is obvious that paying for a car in monthly instalments with no interest is cheaper than paying for the vehicle up front, how large is the difference though?

1st option: you pay 40 000 PLN up front, the car is worth 12 000 PLN after 3 years. How much is 12 000 PLN in 3 years worth today? Assuming an interest rate of 10%, the present value can be calculated as follows:

In other words, you pay 40,000 upfront and get 9,015.76 in 3 years – the car costs you 30,984.24 PLN.

2nd option: set instalments for 3 years, 11,200 PLN a year:

Purchase versus long-term lease*
	Time	Value (PLN)	Discount rate	Present value
Purchase
Vehicle price:	today	40,000	1	-40,000
Buy-back:	in 3 years	12,000	0,751315	+9’015.76
Total cost:				-30,984.24
Long-term lease
Instalment 1st year	today	11,200	1	-11,200
Instalment 2st year	in 1 year	11,200	0,909091	-10,181.82
Instalment 3st year	in 2 years	11,200	0,826446	-9,256.20
Total cost:				-30’638.02

*The following table does not constitute an offer as defined by the Polish Civil Code. Individual prices may differ, depending on the model, accessories and availability. Should you have any questions, please consult the “offer” page or contact Toyota Bielany Corpo Cars directly.

3rd Myth

“Long-term lease is dangerous – only purchasing a vehicle guarantees its long-term operations”.

This is not true either!

Facts

In an FSL deal with our company, the vehicle remains the property of Toyota Leasing Polska Sp. z o.o., which is wholly owned by Toyota Bank, one of the largest and most profitable companies in the world. Contrary to popular beliefs, an FSL deal is in fact safer than purchasing a vehicle, as all the major risks shift from the lessee, to the lessor. These include:

• risk associated with changes in residual value,
• interest rate risk,
• all changes in costs of operations.