Unlocking Efficiency and Savings: The Benefits of VOSA Truck Leases

Fleet Management|Blogs
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Truck driving on the road

`Commercial vehicles are designed with specifications that are optimized to meet a variety of needs in the transportation industry. From refrigerated box trucks that supply your favorite restaurants with food and beverage products to yard tractors that help organize warehouses, these vehicles are essential to the daily growth of supply chains.

However, these essential trucks, vans, trailers, and tractors can range in prices that can drive high fleet management costs, especially for companies that utilize multiple commercial vehicles on a regular basis. Although there are options for both truck rental and ownership, more businesses are gaining significant benefits from commercial vehicle leasing. In this article, we’ll explore the different types of leases fleet managers can invest in for their business.

Understanding Commercial Vehicle Leasing

Through advancements in technology and customer service from third-party logistics (3PL) providers such as Ryder, commercial vehicle leasing is simpler today than in previous years. However, it’s crucial for fleet managers to fully understand the conditions and type of lease they’re signing up for. Otherwise, this can impact overhead in a negative way, which contradicts the cost savings business owners are striving to gain. 

The two most common commercial vehicle leasing options are capital leases and operational leases. A capital lease (also known as a “finance lease”) is best suited for fleet managers that want to purchase the commercial vehicle at the end of their lease because the vehicle becomes a business asset. Its residual value also belongs to the lender at the end of the lease term.

Operational leases, on the other hand, handle all costs associated with maintenance and have a lower upfront cost because, ultimately, it is not a business asset; rather, these leases are treated more like a rental.

Because capital and operational leases are vastly different than one another, it’s important to choose the option that provides you with the best benefits for your business’s needs. If you’re looking for potential ownership benefits and can handle the responsibility of running costs, it’s suggested that you choose a capital lease; otherwise, operational leases are best for the flexible terms at a lower price point.

What is a VOSA Lease?

Business owners looking to add a commercial vehicle to their fleet may also acquire it through a Vehicle Operator Services Agreement (VOSA), or tax advantage lease. Although they’re more uncommon than capital or operational leases, VOSA leases are an excellent option for fleet managers because they’re built around specific operational conditions involving vehicle maintenance, inspections, and safety standards. In other words, they’re designed to comply with regulatory requirements for commercial vehicles.

The VOSA lease is a new agreement for fleet owners that wish to outsource their fleet and keep the tax benefits associated with ownership. It was introduced to play a significant role in vehicle safety and compliance, but it also offers the perks of a full-service lease with additional benefits.

Benefits of VOSA Leases for Commercial Fleets

There are a few reasons to opt into VOSA leases for commercial fleets, but one of the most significant advantages is the financial benefits you receive, particularly tax perks. For example, interest and tax depreciation become deducted from your fleet, as well as executory and maintenance service costs.

In general, fleet management is streamlined to reduce administrative burden while improving efficiency. Business owners can prioritize other tasks to keep operations running smoothly instead of focusing solely on supervision of their commercial fleet. That’s because VOSA leases cover regular inspections, maintenance, and provide cost-effective compliance that reduces fines and penalties in the event of an accident.

The Downsides of VOSA Leases

 While there are excellent benefits, there are also some downsides of VOSA leases that can fleet managers decide if they’re right for their business. A VOSA lease may offer the benefits of ownership (tax deduction, interest depreciation, etc.), but business owners don’t actually own their fleet through this lease. In fact, there are some limited ownership rights and contractual obligations such as vehicle customization or usage that may not align with specific business needs. And, while VOSA leases are designed to optimize transportation networks and cut back on expenses, there is the possibility of higher monthly payments compared to traditional leases.

Why Companies Should Consider VOSA Leases

With the multiple leasing options available, fleet managers should completely understand the variety of terms and conditions for each to decide how they maintain their fleet. Although capital and operational leases have their own set of commercial fleet optimization advantages, companies should consider VOSA leases for the following reasons: 

  • Tax benefits for depreciation and interest
  • Long-term cost savings and operational efficiencies, despite higher monthly payments
  • Insurance that vehicles meet all regulations, which is crucial in the commercial vehicle industry

Ultimately, compliance, safety, and cost-effectiveness are combined for a strategically sound choice for commercial fleet needs in a VOSA lease. However, these benefits are only suitable to business owners who want the tax benefits and regulatory protection without complete ownership. Otherwise, capital or operational leases may be the better options.

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